TYNE & WEAR ARCHIVES & MUSEUMS JOINT COMMITTEE › files › 5800-tyne-and-wear-archives … · Tyne & Wear Archives & Museums Joint Committee Treasurer’s Report and Accounts 2011/12

TYNE & WEAR ARCHIVES & MUSEUMS

JOINT COMMITTEE

TREASURER’S REPORT AND ACCOUNTS

2011/12

CONTENTS Page

Explanatory Foreword by the Treasurer to the Tyne & Wear Archives & Museums Joint Committee

5

Core Financial Statements 19

Movement in Reserves Statement 20

Comprehensive Income & Expenditure Statement 21

Balance Sheet 22

Cash Flow Statement 23

Notes to the Core Financial Statements & Accounting Policies

24

Statement of Responsibilities for the Statement of Accounts

62

Annual Governance Statement 63

Independent Auditor’s Report (to be added post audit) 77

Glossary 80

Tyne & Wear Archives & Museums Joint Committee Treasurer’s Report and Accounts 2011/12

Page 5

Explanatory Foreword by the Treasurer to the Tyne & Wear Archives & Museums Joint Committee

1. Introduction

The purpose of the foreword is to provide a guide to the most significant elements of the detailed Statement of Accounts, along with commentary on the key issues.

The Joint Committee manages its affairs to ensure the economic, efficient and effective use of resources and to safeguard its assets. This task is shared by all Members and Officers of the Joint Committee. The Treasurer to the Joint Committee has a statutory responsibility to ensure sound financial management.

These accounts set out the results of the Joint Committee’s activities for the year ended 31

March 2012 and its financial position at that date.

This statement of accounts has been prepared in accordance with proper practices as set out in the CIPFA (Chartered Institute of Public Finance & Accountancy) Code of Practice on Local Authority Accounting in the United Kingdom (the Code). The Code requires that the accounts present a true and fair financial position of the Joint Committee. Suitable accounting policies have been employed and where necessary prudent judgements and estimates were made which complied with the Code.

The purpose of this foreword is to provide the reader with:

• A review of the Joint Committee’s financial results in 2011/12 and its financial position;

• An overview of activities and significant matters which occurred during the year; and

• An understandable guide to the accounting statements.

2. Background

Tyne & Wear Archives & Museums (TWAM) is a joint service of the five local authorities (Newcastle, Sunderland, South Tyneside, North Tyneside, and Gateshead) and is governed by a Joint Committee consisting of 15 members drawn from the five constituent councils.

A 10 year Joint Agreement lays out the terms and conditions of the relationship and the involvement of central government. Under the Joint Agreement, TWAM manages ten museums and the archives for Tyne and Wear. In addition, it manages two museums Great North Museum: Hancock (GNM) and the Hatton Gallery, under an agreement with Newcastle University.

The allocation of costs is governed by Service Level Agreements enabling the constituent authorities and the University to pay agreed charges. Costs are classified under four major headings – Museums operational, Museums specialist, Archives and Corporate.

Museums operational costs: These relate to the basic running costs of individual museums and galleries, including employee costs associated with running each building including visitor services personnel, premises related expenses and supplies and services. The income generated from shops, venue hire and café franchises and contributions to the Acquisitions Reserve and


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purchases of new acquisitions are also included within this heading.

Museum Specialist costs: These relate to the provision of specialist services. This includes Archaeology, Conservation, Art, History, Learning, Communications and Design. Costs are allocated on the basis of the use made of the services by museums and galleries within a local authority area and the needs of the collections in each area.

Archives costs: These comprise all costs attributable to the employment of staff specialising in archives and all other expenditure incurred attributable to the delivery of an archives service including such proportion of the corporate costs as is reasonably attributable to the Archives service.

Corporate costs: Are determined by TWAM and financed from Grant-in-Aid from the Department for Culture, Media and Sport (DCMS).

Services include:

• The Senior Management Team;

• Museums administrative, financial, ICT and human resources staff;

• Lead Authority support services including Treasurers, Human Resources and Legal;

• Corporate training and professional development;

• Corporate accommodation at Discovery Museum;

• Communications of a corporate nature;

• Development Team.

North East Regional Museums Hub/Renaissance North East: TWAM was also the lead partner for the North East Regional Museums Hub (NERMH) which operated on behalf of a partnership which included the Museums, Libraries and Archives Council (MLA), Beamish: The Living Museum of the North, The Bowes Museum and Hartlepool Museums Service. MLA dissolved the Hub partnerships with effect from 30th June 2011. TWAM continued to receive support from this programme in 2011/12 for both activities within Tyne and Wear and region-wide. Separately, TWAM continued to deliver the regional Museum Development programme for the North East, which includes elements such as the Green Museum programme, and the co-ordination of the Regional Volunteer Museum network.


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3. Summary of Financial Results 2011/12

• The net cost of service for Museums, Galleries & Archives was £7,218,283 a decrease of £2,164 compared to 2010/11 (Note 1).

o Gross expenditure, excluding trading activity, was £12,972,854, a decrease of £3,388,507 (20.7%) compared to 2010/11. This reflects the cost reduction programme and completion of a number of major projects;

o The expenditure on core activity was primarily financed by client contributions of £6,410,392 and revenue Grant-in-Aid (G-i-A) from the Department for Culture, Media and Sport of £1,368,000. Core activities are income, including trading activity and expenditure directly incurred in the day to day running of the archives, museums and galleries;

o Other grants and contributions were £4,035,108, including capital G-i-A of £550,000 a decrease of £3,375,982 (46%). This is primarily as a result of capital G-i-A funded schemes committed in prior years being undertaken in 2010/11 and the completion of a number of major projects;

o In 2011/12, TWAM received a grant of £1,940,900 (£2,203,222 in 2010/11) from the MLA Council, including £1,887,973 (£2,185,039 in 2010/11) in respect of the Renaissance programme.

• The turnover for external trading activity in respect of shop sales, venue hire, café franchises, records management and the Archaeology Unit was £1,243,683, an increase of £73,392 (6.3%).


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4. Income and Expenditure for the Year

Table 1 illustrates, in broad terms, where the money comes from:

2010/11 Change

£000 £000 % £000

(£6,770) Client Contributions (£6,410) 47.7% £360

(£3,731) DCMS Grant-in-Aid (£1,918) 14.3% £1,813

(£2,185) MLA Renaissance Grant (£1,888) 14.0% £297

(£2,955) Other Grants & Contributions (£1,597) 11.9% £1,358

(£1,170) Trading Activity (£1,244) 9.2% (£74)

(£321) Other Income (£385) 2.9% (£64)

(£17,132) (£13,442) 100% £3,690

Table 1: Where the Money comes from

2011/12

Where the Money comes from 2011/12

DCMS

Grant-in-Aid

14.3%

MLA

Renaissance Grant

14.0%

Other Grants &

Contributions

11.9%

Trading Activity

9.2%

Other Income

2.9%

Client Contributions

47.7%


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Table 2 illustrates, in broad terms, what the money was spent on:

2010/11 Change

£000 £000 % £000

£8,130 Employees £7,982 57.6% (£148)

£8,231 Running Costs £4,991 36.0% (£3,240)

£966 Trading Activity £891 6.4% (£75)

£17,327 £13,864 100% (£3,463)

Table 2: What the Money was spent on

2011/12

What the Money was spent on 2011/12

Employees

57.6%

Running Costs

36.0%

Trading Activity

6.4%


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The analysis of individual client contributions is illustrated in Table 3:

2010/11 Change

£000 £000 % £000

(£545) Gateshead (£536) 8.4% £9

(£2,413) Newcastle (£2,298) 35.8% £115

(£778) North Tyneside (£734) 11.4% £44

(£783) South Tyneside (£731) 11.4% £52

(£1,531) Sunderland (£1,452) 22.7% £79

(£720) Newcastle University (£659) 10.3% £61

(£6,770) (£6,410) 100% £360

Table 3: Analysis of Client Contributions

2011/12

Analysis of Client Contributions 2011/12

Sunderland

22.7%

South Tyneside

11.4%

North Tyneside

11.4%

Newcastle

35.8%

Gateshead

8.4%Newcastle University

10.3%


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5. Budget Comparison

The Joint Committee’s budget for core activities in 2011/12 was £6,230,440. The budget comprises three elements: The net cost of service (Note 1), trading activity (Note 24) and interest income (Note 10). The table below compares client contributions to the original budget. The primary reason for the increase of £179,952 (2.9%) was additional contributions required to fund the severance costs associated with the workforce planning proposals to meet the 2012/13 budget reductions. As the University financial year runs from 1 August to 31 July, this is a mid-year position. It is anticipated that the outturn at 31 July 2012 will be close to the budget estimate.

Estimate Actual Variation

£ £ £

Gateshead 490,530 535,868 45,338

Newcastle 2,202,990 2,298,200 95,210

North Tyneside 702,210 734,046 31,836

South Tyneside 679,060 731,184 52,124

Sunderland 1,406,110 1,452,077 45,967

Newcastle University 749,540 659,017 (90,523)

Total 6,230,440 6,410,392 179,952

Cost of Service 6,695,010 7,299,061 604,051

Trading Activity (427,570) (439,365) (11,795)

Interest Income (37,000) (33,902) 3,098

Use of Reserves 0 (415,402) (415,402)

Total 6,230,440 6,410,392 179,952

Client

6. Comparison with 2010/11

The decrease in TWAM’s total gross expenditure of £3,462,723 (20%) between years is primarily due to:

• The cost reduction programme; and

• This completion of a number of major projects.

7. Capital Expenditure

Generally TWAM’s capital programme and the museums' capital schemes are approved and controlled by the relevant constituent council or the University as part of its own capital programme, as they are owners of the assets. However, since 2005/06 the DCMS has allocated TWAM capital G-i-A. TWAM manages this funding on behalf of the five councils and the University. The funding has been utilised towards the costs of refurbishment and renewals of buildings, plant and equipment, digitisation programmes, new joint storage schemes and the purchase of other relevant capital items. The allocation in 2011/12 of £550,000 was distributed amongst TWAM venues and contributed towards refurbishment, renewals, and acquisitions. Projects supported during 2011/12 included:


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• Installation of energy efficient lighting at the Shipley Art Gallery, Laing Art Gallery, Discovery Museum and Arbeia Roman Fort;

• Improvements to the shop facilities at the Shipley Art Gallery, Laing Art Gallery, South Shields Museum, Sunderland Museum & Winter Gardens, and GNM: Hancock;

• ICT upgrades and website redevelopment;

• Improvements to collections storage across TWAM buildings;

• Improvements to the Archives Learning Room;

• Contribution to the Sidings project at Monkwearmouth Station Museum to provide an enclosure for historic railway wagons to protect them from weather and vandalism and enable an enhanced level of interpretation;

• Contribution to TWAM’s new collections management software, KE-EMu which went live in November 2011. The new system revolutionised how TWAM stores and manages collections information and will also improve how our diverse audiences engage with collections.

8. Directors Review of 2011/12 and Looking Ahead

TWAM remains committed to its mission and vision as articulated in its Corporate Plan.

Mission, Vision and Commitment

Our mission is to help people determine their place in the world and define their identities, so enhancing their self-respect and their respect for others.

Our vision for the future is for everyone in Tyne and Wear to have access to museum and archive provision, to use this access and to value it for the significant and positive impact that it makes upon their lives. We will provide real or virtual, worldwide access to our museums and their collections.

Our commitment is to a World-class service that is innovative, imaginative, creative, totally inclusive, secure and sustainable.

Beliefs

TWAM, through its Joint Committee and through its officers, remains true to its stated beliefs, namely to:

• Make a positive difference to people’s lives;

• Inspire and challenge people to explore their world;

• Be a powerful learning resource for people of all needs and backgrounds;

• Act as an agent of economic regeneration and help build and develop communities and the aspirations of individuals;

• Be fully accountable to our stakeholders and users;

• Make our resources accessible to everyone.


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Recent Performance

Level of Usage and Activity

TWAM’s performance in 2011/12 has remained very strong with 1.8m visits in person, 1.25m virtual visits and over 88,000 children in organised education parties – beating our target by nearly 8,000.

The most significant achievement of 2011/12 was, of course, the securing of Major Partner Museum funding, through Arts Council England (ACE). This will provide a total of £5m over 3 years to support activity across TWAM ensuring excellence, developing audiences, building sustainability, supporting leadership and engaging children and young people. The transfer of sponsorship responsibility for TWAM’s ‘core national’ funding from DCMS to ACE has meant that TWAM now has two distinct and strong relationships with ACE, the lead body nationally for arts, museums and libraries. We also however, maintain a strong relationship with The National Archives.

Particularly significant activities funded within the Major Partner Museum programme will include the development of a centre for excellence in the development of work with children and young people, the development of new ‘collection access points’ and a programme of innovative exhibitions to include pop-up and dispersed exhibitions as well as more conventional, high profile exhibitions such as Family Values at the Laing Art Gallery and The Story of the Teddy Bear at Sunderland Museum and Winter Gardens.

TWAM’s Business Partnership, Connect through Culture, invested £24,820 in projects which helped lever over £146,210 of external funding to deliver projects worth over £236,000.

Trading operations have generated valuable income for TWAM during 2011/12. Overall, income generation has increased by 14%. Whilst retail sales have remained buoyant in what is a difficult trading climate, it is the increase in venue hire exceeding £100k for the first time and the development of e-commerce which increased 161% to £9.4k that have shown the biggest improvement in performance.

Across the organisation partnerships remained important as a number of venues hosted exhibitions and learning programmes in association with national museums, closer relationships were developed with the region’s universities and TWAM continued to maintain and develop its links with international museums.

A significant landmark was the installation and ‘go-live’ of Ke-EMU software to manage and provide access to museum collections replacing the MODES software which has been in use, in various versions, for 20 years.

TWAM also successfully gained reaccreditation under Investors in People in 2011/12, achieving the coveted ‘Silver’ standard.

Awards

Highlights of the year include:

• Great North Museum: Hancock

o Won Gold in the Access for All category, North East Regional Tourism Awards 2011 and Visit Britain Awards 2012.

o Bronze Winner, North East Regional Tourism Awards 2011


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Business Tourism.

o Short-listed in the Temporary or touring exhibition category Pharaoh: King of Egypt, Museums and Heritage Awards for Excellence.

o Short-listed, Journal Culture Awards 2012 Pharaoh: King of Egypt

• Shipley Art Gallery short-listed in the Annual Award for Museums, Contemporary Arts Society.

• Hatton Gallery selected for Artist Rooms 2013-15 programme.

• Culture Shock

o Winner, Renaissance North East, Journal Culture Award.

o Short-listed, Clore Award.

Future Revenue Funding

Pressures on Local Joint Committee Budgets

Following two previous years of efficiency savings further significant reductions have been made in local authority revenue contributions to the Joint Committee for 2012/13. These have been addressed by TWAM via a programme of efficiency savings, income generation, workforce planning and, where unavoidable, small reductions in opening hours. The cost of redundancies associated with these savings has been addressed and funded by the constituent local authorities. Those redundancies not confirmed in 2011/12 will, however, appear in the 2012/13 accounts.

Appeals following the implementation of Newcastle City Council’s Single Status Phase 2 have been progressed with only a few ‘Stage 2’ appeals to be heard in 2012/13, though these will have an impact in terms of pay in lieu of back pay and incremental costs. Equal pay claims continue to be an issue for all partner authorities, and this factor is constantly under review.

Current forecasts for the remainder of this spending round suggest the requirement for ongoing year-on-year budget reductions will continue and TWAM will seek to work with constituent authorities to plan these strategically to reshape service delivery and to achieve an extended planning period by securing longer term funding allocations.

TWAM Review

The Joint Agreement, signed in 2009, provided for a review of TWAM following the merger of the former museum and archive services. Now that Major Partner Museum funding has been confirmed this will take place in 2012/13. In parallel Sunderland City Council submitted notice of their intention to withdraw from the Joint Agreement at 31 March 2013 in order to renegotiate the agreement.

TWAM, in partnership with the Arts Council has commissioned a review which will benchmark the quality, value for money, and fairness of distribution of service across TWAM, reviewing engagement with partner authorities, and exploring options for alternative delivery models.

External Funding Prospects

The world recession has impacted on every aspect of our business. The depth and length of the recession is critical here. There will continue to be challenges in


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in terms of raising funds from corporate and charitable sources. Similarly, commercial activity such as archaeological field work will be increasingly hard-won whilst housing and commercial development is stalled.

Individual, disposable income is obviously restricted, but the promotion of free admission should generate more visitors, albeit spending less per head.

The Trustees of the Tyne & Wear Archives & Museums Development Trust continue to be strong advocates for TWAM’s fundraising activity, using their skills and knowledge to support the work of TWAM’s Development Team. The application to the Arts Council’s Catalyst Art fund in respect of the developments at the Hatton Gallery is particularly significant as this will develop further fundraising skills and capacity as well as providing support for an activity programme.

It is important that TWAM maximises opportunities for income generation from all possible sources. The organisation is also working on developing commissioned services and on enhancing the entrepreneurial culture within the organisation. This work is enshrined in the sustainability and resilience programme written into TWAM’s Major Partner Museum programme in support of Arts Council Goal 3.

In 2011/12 TWAM was successful in securing funding from the Paul Hamlyn Foundation as one of 9 museums across the UK supported through the ‘Our Museum’ project. This is an innovative organisational change project which seeks to increase community participation and engagement in TWAM and will be co-managed between a cross cutting staff group and community members.

As reported to the Joint Committee throughout 2011/12, this year has continued to be very challenging for TWM Archaeology. This is largely due to the current standstill in the building of new housing. Contract work currently comes largely from small development, from work by utility companies, and as a result of the development of open cast coal mining sites. Following restructuring of the archaeology team and a reduction in size in 2010/11, further reductions in staffing have been made in 2011/12 to help increase the sustainability of the team.

Capital Projects

TWAM has sourced funding for a range of capital improvements which it manages on behalf of the five councils and Newcastle University. Projects within the programme include:

• Continuation of discussions with Newcastle City Council about a longer term major capital redevelopment of the Laing Art Gallery in line with the development of East Pilgrim Street and the advent of Tax Incremental Funding.

• Development in partnership with Newcastle University of a significant capital scheme at the Hatton Gallery.

• Implementation of the Making of Modern Tyneside project at Discovery Museum.

• Construction of a new ramp to improve access at Arbeia Roman Fort.

• Capital investment to increase energy efficiency and reduce carbon consumption at a number of TWAM sites. Reducing energy consumption overall is an important target for TWAM in 2012/13 and the organisation is


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working with the Julie’s Bicycle organisation to achieve the Industry Green standard.

• TWAM will continue to work closely with its client authorities to feed into, and contribute to, major spatial developments, particularly in North Tyneside.

The Importance of Maintaining Reserves

As in previous years, it is increasingly important to establish and maintain realistic reserves and maintain the ability to earmark these for both future developments and challenges.

9. Changes in Accounting Policies

For 2011/12 the main changes introduced into the Joint Committee’s accounts are:

Heritage Assets: The Code of Practice on Local Council Accounting in the United Kingdom 2011/12 has introduced a change to the treatment in accounting for heritage assets managed by the Joint Committee. The Joint Committee’s accounting policies for recognition and measurement of heritage assets are set out in the Joint Committee’s summary of significant accounting policies (Page 56) Carbon Reduction Commitment: The 2011/12 financial year is the first year for which there will be an obligation to purchase and surrender Carbon Reduction Commitment (CRC) Allowances in relation to carbon dioxide emissions. Following the end of 2011/12, participating authorities will submit the annual report on their emissions for the 2011/12 financial year. The five local authorities for whom the Joint Committee manages archives, museums and art galleries are required to participate in the CRC Energy Efficiency Scheme. This scheme is currently in its introductory phase which will last until 31 March 2014. Councils are required to purchase and surrender allowances, currently retrospectively, on the basis of emissions i.e. carbon dioxide produced as energy is used. As carbon dioxide is emitted, a liability and an expense are recognised. The liability will be discharged by surrendering allowances. The liability is measured at the best estimate of the expenditure required to meet the obligation, normally at the current market price of the number of allowances required to meet the liability at the reporting date. The cost to the Joint Committee is recognised and reported in the premises costs and is apportioned to buildings on the basis of energy consumption. Exit packages: There is a new requirement to disclose the number and cost of exit packages within the remuneration note to the accounts.


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10. Main Statements within the Accounts and their Purpose

Tyne & Wear Archives & Museums' final accounts for 2011/12 are set out in the following pages and comprise:

Core Financial Statements

Movement in Reserves Statement (Page 20)

This statement shows the total movement in the year into and out of Reserves. Reserves are of two kinds, Usable and Non-Usable Reserves.

Usable Reserves are where the Joint Committee has in previous years made a reserve for certain eventualities that were quantifiable and likely to happen. They may also be made up of Grants received but not spent in the current year. When the expenditure occurs then a transfer is made from reserves to match that expenditure so that there will be nil impact on the Income/Expenditure Statement in that financial year. Similarly, the Joint Committee may wish to increase a reserve on the basis of what is likely to happen in the next year and that will be a charge on the current Income/ Expenditure Account. Unusable Reserves are usually ‘accounting entry related’ such as revaluation reserves and restatement reserves.

Comprehensive Income and Expenditure Statement (Page 21)

This Statement shows the economic cost in the year of providing services in accordance with generally accepted accounting practices.

Balance Sheet (Page 22)

The Balance Sheet shows the value as at the Balance Sheet date of the assets and liabilities recognised by the Joint Committee. The net assets of the Joint Committee (assets less liabilities) are matched by the reserves held by the Joint Committee. The reserves are reported in two categories as outlined above, Usable Reserves and Unusable Reserves.

Cash Flow Statement (Page 23)

The Cash Flow statement shows the movement in cash and cash equivalents of the Joint Committee during the reporting period. The statement shows how cash was generated or utilised by the organisation’s activities and the net effect of this on cash/cash equivalents held by the Joint Committee.

The amount of net cash flow is a key indicator of the extent to which TWAM’s operations have been funded by either grant income or earned income.

Notes to the Core Financial Statements (Page 24)

This section provides the reader of the accounts with more details on the financial transactions of the Joint Committee and also includes Accounting Policies significant to the understanding of the annual accounts.

Statement of Responsibilities for the Statement of Accounts (Page 62)

This statement explains both the Joint Committee’s and the Treasurer to the Joint Committee’s responsibilities in respect of the Statement of Accounts.

Annual Governance Statement (Page 63)

This sets out the Joint Committee’s approach to both corporate governance and internal control.


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Glossary (Page 80)

These pages provide a glossary of terms used throughout the Treasurer’s Report and Accounts.

11. Further Information

Interested members of the public have a statutory right to inspect the accounts before the audit is completed. The availability of the accounts for inspection is advertised in the local press. When the accounts are published copies are available for consultation in the Customer Service Centre located on the ground floor at Newcastle Civic Centre, Newcastle upon Tyne, NE99 1RD and on the Tyne & Wear Archives & Museums website at http://www.twmuseums.org.uk/about/corporatedocuments/annual-report-and-accounts/

If, however, you wish to purchase a copy of this printed booklet, a nominal charge of £5.00 is usually made to cover printing costs. If this information is needed in another format or language please contact the Finance Department at [email protected]

Enquiries on the accounts, or other general financial matters, should be addressed in the first instance to Jackie Reynolds, Head of Finance, Governance & Resources, Tyne & Wear Archives & Museums on 0191 277 2158 or e-mail [email protected]

As part of a programme of continuous improvement we are striving to improve our system of reporting back to users of services. If you have any problems understanding this publication, or have any suggestions on how it may be improved, please contact either:-

Paul Woods Iain Watson Treasurer to the Joint Committee Director,

Tyne & Wear Archives & Museums Civic Centre Discovery Museum Newcastle upon Tyne Newcastle upon Tyne NE99 1RD NE1 4JA


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Core Financial Statements


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Movement in Reserves Statement as at 31 March 2012

General Fund

Earmarked

General Fund

(Note 8)

Grants

Unapplied

Account

[Note 8]

Total Usable

Reserves

Unusable

Reserves

[Note 21] Total Reserves

£ £ £ £ £ £

Balance at 31 March 2010 carried forward 0 (1,996,444) (203,525) (2,199,969) 150,530 (2,049,439)

Movement in Reserves during 2010/11

(Surplus) or deficit on the provision of services 195,100 0 0 195,100 0 195,100

Other Comprehensive income and expenditure 0 0 0 0 0 0

Total Comprehensive Income and

Expenditure 195,100 0 0 195,100 0 195,100

Adjustments between accounting basis &

funding basis under regulations (Note 5) 42,002 0 0 42,002 (42,002) 0

Net (Increase)/Decrease before transfers to

Earmarked Reserves 237,102 0 0 237,102 (42,002) 195,100

Transfers (to)/from Earmarked Reserves (237,102) 292,377 (55,275) 0 0 0

(Increase)/Decrease in 2010/11 0 292,377 (55,275) 237,102 (42,002) 195,100


Movement in Reserves during 2011/12

(Surplus) or deficit on the provision of services 421,723 0 0 421,723 0 421,723

Other Comprehensive income and expenditure 0 0 0 0 0 0

Total Comprehensive Income and

Expenditure 421,723 0 0 421,723 0 421,723

Adjustments between accounting basis &

funding basis under regulations (Note 5) 77,189 0 (21,117) 56,072 (56,072) 0

Net (Increase)/Decrease before transfers to

Earmarked Reserves 498,912 0 (21,117) 477,795 (56,072) 421,723

Transfers (to)/from Earmarked Reserves (498,912) 498,912 0 0 0 0

(Increase)/Decrease in 2011/12 0 498,912 (21,117) 477,795 (56,072) 421,723



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Comprehensive Income & Expenditure Statement for the year ended 31 March 2012

Gross

Expenditure

Gross

Income

Net

Expenditure

Gross

Expenditure

Gross

Income

Net

Expenditure

£ £ £ £ £ £

16,361,361 (9,140,914) 7,220,447 Museums, Galleries & Archives¹ 12,972,854 (5,754,571) 7,218,283

16,361,361 (9,140,914) 7,220,447 Cost of Services (Note 1) 12,972,854 (5,754,571) 7,218,283

965,633 (1,170,291) (204,658) Other Operating Expenditure (Note 9 & Note 24) 891,417 (1,243,683) (352,266)

0 (51,074) (51,074) Financing & Investment Income and Expenditure (Note 10) 0 (33,902) (33,902)

0 (6,769,615) (6,769,615) Non-Specific Grant Income (Note 11 & Note 27) 0 (6,410,392) (6,410,392)

17,326,994 (17,131,894) 195,100 Deficit on Provision of Services 13,864,271 (13,442,548) 421,723

0 0 0 Other Comprehensive Income and Expenditure 0 0 0

17,326,994 (17,131,894) 195,100 Total Comprehensive Income and Expenditure 13,864,271 (13,442,548) 421,723

2010/11 2011/12

¹ Under SeRCOP Museums, Galleries & Archives would be classed as Cultural, Environmental, Regulatory and Planning Services.


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Balance Sheet as at 31 March 2012

31 March 2012 Notes

£ £

70,796 Intangible Assets 100,127 14

66,975 Long Term Debtors 57,502 16.1

137,771 Long Term Assets 157,629

238,486 Inventories 276,196 15

2,132,990 Short Term Debtors 1,083,057 16.2

251,086 Cash and Cash Equivalents 1,184,333 17

2,622,562 Current Assets 2,543,586

(905,994) Short Term Creditors (1,268,599) 18

(905,994) Current Liabilities (1,268,599)

0 Long Term Liabilities 0

1,854,339 Net Assets 1,432,616

(1,962,867) Usable Reserves (1,485,072) 8

108,528 Unusable Reserves 52,456 21

(1,854,339) Total Reserves (1,432,616)

31 March 2011

Treasurer to the Joint Committee Certificate I certify that the accounts set out on pages 20 to 61 give a true and fair view of the financial position of the Joint Committee as at 31 March 2012. Signed P.V. Woods, Treasurer to the Joint Committee Date 27 September 2012


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Cash Flow Statement as at 31 March 2012

2010/11 2011/12

£ £

(195,100) Net (deficit) on the provision of services (421,723)

(1,375,810)

Adjustments to net (deficit) on the provision of services for non cash

movements 1,409,333

0

Adjustments for items included in the net surplus or (deficit) on the provision of

services that are investing and financing activities 0

(1,570,910) Net cash flows from Operating Activities (Note 22) 987,610

(70,796) Investing Activities (Note 14 and Note 22) (54,363)

0 Financing Activities 0

(1,641,706) Net (decrease) / Increase in cash and cash equivalents 933,247

1,892,792 Cash and cash equivalents at the beginning of the reporting period 251,086

251,086 Cash and cash equivalents at the end of the reporting period (Note 17) 1,184,333


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Notes to the Core Financial Statements 1. Net Cost of service

The following table provides a subjective analysis of the Net Cost of Service element of the Comprehensive Income and Expenditure statement split between core activity, Renaissance and projects.

Total Core Activity Renaissance Projects Total

2010/11 2011/12 2011/12 2011/12 2011/12

Actual Actual Actual Actual Actual

£ £ £ £ £

Expenditure

8,130,103 Employees 6,114,975 1,316,209 550,568 7,981,752

1,918,696 Premises 1,606,855 0 105,491 1,712,346

164,042 Transport 57,082 40,472 27,816 125,370

Supplies and Services

5,675,670 - General 912,527 532,156 1,277,597 2,722,280

88,078 - Acquisitions 29,555 0 11,963 41,518

315,451 Central Support Services 294,917 26,953 290 322,160

69,321 Recharges 67,428 0 0 67,428

16,361,361 9,083,339 1,915,790 1,973,725 12,972,854

Income

(3,698,590) DCMS Grant-in-Aid (1,394,012) 0 (523,988) (1,918,000)

(5,130,500) Other Grants/Contributions (167,075) (1,916,180) (1,401,853) (3,485,108)

(311,824) Other Income (198,159) (1,160) (152,144) (351,463)

(9,140,914) (1,759,246) (1,917,340) (2,077,985) (5,754,571)

7,220,447 Net Cost of Service 7,324,093 (1,550) (104,260) 7,218,283


Page 25

2. Heritage Assets

The Code has introduced a change in accounting policy in relation to the treatment of heritage assets

1 which impacts on the treatment of those heritage

assets managed by the Joint Committee on behalf of the five Tyne & Wear local authorities

2. These changes are being adopted fully by the Joint Committee in

2011/12.

The standard requires a new class of asset, heritage assets, to be disclosed separately in the Balance Sheet for 2011/12 financial statements. The Joint Committee’s legal status does not allow ownership of assets, therefore heritage assets will be included in the balance sheets of the five local authorities rather than in the Joint Committee’s, alongside any other appropriate disclosures required under FRS 30. Assets have been allocated to the five local authorities based on the methodology laid out in the Joint Agreement.

The standard requires the Joint Committee to clearly set out their policy for acquisition, preservation, management and disposal of heritage assets. This information is provided in full and can be referenced on the TWAM website

3.

Heritage Assets are assets that are managed by the Joint Committee ‘principally for their contribution to knowledge or culture’. The heritage assets held and managed by the Joint Committee are the collections of assets and artefacts either exhibited or stored in:

• Shipley Art Gallery (founded 1915)

• Discovery Museum (founded 1934)

• Tyne and Wear Archives (based at Discovery Museum, est. 1974)

• Great North Museum: Hancock (founded 1829)

• Great North Museum: Resource Centre (based at Discovery Museum, est. 2009)

• Hatton Gallery: Great North Museum (founded 1926)

• Laing Art Gallery (founded 1901)

• Segedunum Roman Fort, Baths & Museum (founded 2000)

• Stephenson Railway Museum (founded 1986)

• Arbeia Roman Fort & Museum (founded 1953)

• South Shields Museum & Art Gallery (founded 1876)

• Monkwearmouth Station Museum (founded 1973)

• Sunderland Museum & Winter Gardens (founded 1846)

• Washington F Pit (founded 1976)

• Regional Museums Store and Regional Resource Centre (in partnership with and based at Beamish Open Air Museum (est. 2002))

1 See definition of heritage assets provided in the Glossary to the financial statements

2 See basis on which exhibits, records and archives are held in the Accounting Policies

3 http://www.twmuseums.org.uk/userfiles/file/TWAM_Acquisition_and_Disposals_Policy_2009_v%201_5.pdf and

http://www.twmuseums.org.uk/userfiles/file/TWAM_Conservation%20and%20Collections%20Care%20Policy%20_March%202012_.pdf


Page 26

The collections held by the Joint Committee are diverse, covering six principal fields. The collection ranges in medium and materials, and includes objects, specimens, documents, digital media and film. The total collection size is estimated at approximately 1.1m museum objects and approximately 1.6k cubic metres of archive material. It reflects a period of collecting of over 200 years by the archives, museums and their predecessor bodies. The definition of numbers in the collection follows museum and archive best practice but, in terms of valuing the asset, is fairly arbitrary as single items accessioned may comprise a wide range of objects, artefacts, components or supporting papers. However, the following table indicates the estimated number of objects/records held within each field:

Estimated

number of

objects/

records as at 31

March 2011

Number of

objects

accessioned

in the year

Estimated

number of

objects/

records as at

31 March 2012

41,492 69 41,561

226,170 87 226,257

7,105 0 7,105

190,165 2,078 192,243

640,793 8 640,801

1,105,725 2,242 1,107,967

Cubic Metres Cubic Metres1,562 1,562

Natural Sciences (including geology and biology)

Total

Archaeology

Art (including fine art, decorative art, contemporary

craft and design)

History (including social history, costume, maritime

history and engineering, science and industry)

Category

Ethnography

Archives

These collections are not currently valued in their entirety with only the Art collection recognised in the five local authority financial statements for 2011/12. This is due to a number of factors such as the lack of information on purchase price, the unavailability of comparable market values, the diverse nature of the objects and the volume of objects held. The collections are held in the asset register of the Joint Committee.

The value of the art collection shown in the five local authority Balance Sheets is based on detailed insurance valuations (based on market values). Items in the Art collection estimated to be worth in excess of £10k are identified separately for insurance purposes. From these records the valuation of this collection as at 1 April 2012 would be £125 million.

We believe it is not practicable to value the remaining collections as this would incur a disproportionate cost, even if it were possible, and that cost would not be commensurate with any benefits to the organisation or its users. This exemption is permitted by the Code.

The Joint Committee considers that the heritage assets will have indeterminate lives and a high residual value; hence it is not considered appropriate to charge depreciation on these assets.

The following Table sets out the statement of heritage assets as per the requirements of the Code. The increase in Assets in the five local authority Balance Sheets is offset by an increase in their Revaluation Reserve. All valuations were carried out internally by qualified TWAM staff.


Page 27

Estimated

number of Art

objects valued at

£10k or above as

at 1 April 2011

Additional

Objects

recognised in

the year

Estimated

number of Art

objects valued

at £10k or

above as at 1

April 2012

Heritage Assets

recognised at

valuation as at 1

April 2011

Revaluation of Art

objects

Carrying

Value as at 31

March 2012

148 3 151 £13.12m £0.04m £13.16m

700 25 725 £101.37m £0.56m £101.93m

0 0 0 £0m £0m £0m

13 0 13 £0.49m £0m £0.49m

133 1 134 £9.13m £0.01m £9.14m

994 29 1,023 £124.11m £0.61m £124.72m

Gateshead

Newcastle

North Tyneside

South Tyneside

Total

Sunderland

District

A five year summary of transactions relating to Heritage Assets is provided in the table below.

2011/12 2010/11 2009/10 2008/09 2007/08

£ £ £ £ £

Additions

Art Purchases

Gateshead 15,260 14,989 58,864 3,913 18,281

Newcastle 12,000 28,932 47,481 18,132 22,770

North Tyneside 0 0 0 0 282

South Tyneside 0 0 900 2,623 0

Sunderland 6,800 14,719 4,030 2,528 11,659

Total 34,060 58,640 111,275 27,196 52,992

Other Purchases

Gateshead 461 4,147 972 227 510

Newcastle 972 6,581 1,166 3,299 500

North Tyneside 6,364 2,359 13 0 0

South Tyneside 120 8,473 148 308 92

Sunderland 0 7,879 3,310 (35) 7,020

Total 7,917 29,439 5,609 3,799 8,122

Donations

Gateshead 0 0 1,944 51,200 11,200

Newcastle 28,000 2,470 9,000 11,070 183,950


South Tyneside 0 300 0 3,000 0

Sunderland 0 0 0 3,300 200

Total 28,000 2,770 10,944 68,570 195,350

Disposals

Gateshead 0 0 0 0 0

Newcastle 0 0 0 0 0


South Tyneside 0 0 0 0 0

Sunderland 0 0 0 0 0

Total 69,977 90,849 127,828 99,565 256,464

Five year financial summary of Heritage Assets transactions


Page 28

3. Critical Judgements in Applying Accounting Policies

In applying the accounting policies set out in Note 34, the Joint Committee has had to make certain judgements about complex transactions or those involving uncertainty about future events. The critical judgements made in the Statement of Accounts are:

• Influences on going concern, such as future levels of funding from local government. The concept of a going concern assumes that the Joint Committee and its services will continue in operational existence for the foreseeable future. Although contributions from the five local authorities in Tyne & Wear will be cut significantly in 2012/13 and future years this will have no effect on the Joint Committee being a going concern. In addition, whilst Sunderland City Council has submitted notice of their intention to withdraw from the Joint Agreement at 31 March 2013 in order to renegotiate the agreement, again this will have no effect on the Joint Committee being a going concern;

• Possible impairment of investments. Note 13, Nature & Extent of Risks Arising from Financial Instruments, details the Joint Committee’s arrangements for investments and the Lead Authority’s strategy and approach to managing risk. None of the Lead Authority’s investments are impaired;

• Whether other entities with which the Joint Committee has a relationship are subsidiaries, associates or jointly controlled entities. The Joint Committee’s relationships have been assessed and judged to be a joint venture and a jointly controlled entity. Group Accounts have not been prepared on the grounds of materiality;

• Whether contracts need to be accounted for as service concessions or with embedded leases. The Joint Committee’s significant contracts have been reviewed and no embedded finance leases or service concessions found;

• The potential outcome of legal claims by or against the Joint Committee. There are no material outstanding legal claims against the Joint Committee.

4. Assumptions Made About the Future and Other Major Sources of Estimation Uncertainty

The Statement of Accounts contains estimated figures that are based on assumptions made by the Joint Committee about the future or that are otherwise uncertain. Estimates are made taking into account historical experience, current trends and other relevant factors. However, because balances cannot be determined with certainty, actual results could be materially different from the assumptions and estimates.

The items in the Joint Committee’s Balance Sheet at 31 March 2012 for which there is a significant risk of material adjustment in the forthcoming financial year are as follows:


Page 29

Item Uncertainties Effect if Actual Results Differ from Assumptions

Intangible Assets

The Joint Committee has recently purchased new software to manage and provide access to museums collections, Ke-EMU. Intangible assets are depreciated over their useful life which for software is assessed to be five years. If the underlying assumptions surrounding this assessment of the useful life for Ke-EMU are incorrect, the level of depreciation would vary and affect the carrying value of the asset in the balance sheet.

Depending on whether this was an extension to or reduction in the useful life the impact could be positive or negative. The software Ke-EMU replaced had been in use for 20 years, so it is unlikely that impairment losses will arise from a shortening of the useful life of Ke-EMU.

Inventories The Joint Committee holds stock for later sale in the museum’s shops. This stock includes jewellery, gifts, toys, stationery, printed materials and books. The value of this stock at 31 March 2012 was £276k. If the underlying assumptions surrounding the future saleability of this stock were incorrect it would affect the profitability of trading activities.

If 5% of the stock were to be assessed as obsolete this would require a write-down to the trading activities of £13.8k.

Arrears At 31 March 2012, the Joint Committee had a balance of sundry debtors for £1.1m. A review of significant balances suggested that an impairment of doubtful debts of £1.5k was appropriate. However, in the current economic climate it is not certain that such an allowance would be sufficient.

If collection rates were to deteriorate, a doubling of the amount of the impairment of doubtful debts would require an additional £1.5k to set aside as an allowance.

This list does not include assets and liabilities that are carried at fair value based on a recently observed market price.

5. Adjustments between Accounting Basis and Funding Basis under Regulations

This note represents the movement in Reserves required to account for the accrual at the end of March 2012 for accrued but not taken holiday pay and amounts set aside to fund intangible assets.


Page 30

General

Fund

Museums

Earmarked

Reserve

Grants

Unapplied

Account

Movement in

Unusable

Reserves £ £ £ £

Adjustment involving the Capital Adjustment Account:

Amortisation of intangible assets 0 0 0 0

Reversal of items debited or credited to the Comprehensive Income

and Expenditure Statement:

Capital grants and contributions applied 70,796 0 0 (70,796)

Adjustment involving the Accumulated Absences Account

Difference between officer remuneration charged to Comprehensive

Income & Expenditure Statement and that accrued but not taken(28,794) 0 0 28,794

Total Adjustments 42,002 0 0 (42,002)

General

Fund

Museums

Earmarked

Reserve

Grants

Unapplied

Account

Movement in

Unusable

Reserves £ £ £ £

Adjustment involving the Capital Adjustment Account:

Amortisation of intangible assets (25,032) 0 0 25,032

Reversal of items debited or credited to the Comprehensive Income

and Expenditure Statement:

Capital grants and contributions applied 54,363 0 0 (54,363)

Adjustment involving the Accumulated Absences Account

Difference between officer remuneration charged to Comprehensive

Income & Expenditure Statement and that accrued but not taken26,741 0 0 (26,741)

Total Adjustments 56,072 0 0 (56,072)

2010/11

<----------- Usable Reserves ---------->

2011/12

<----------- Usable Reserves ---------->

6. Events after the Balance Sheet date

Events happening between the balance sheet date and the date the accounts are authorised for issue are classified as post balance sheet events. There have been no such events requiring disclosure since the balance sheet date.

7. Contingent Liabilities

Claims under the Equal Pay Act: There remain five claims which have been issued under the Equal Pay Act and/or the Equality Act 2010. Some of these raise different legal arguments to the cases already settled, principally claims of equal value, male claims which are contingent upon female comparators establishing their claims and claims where earlier settlements are being challenged. The legal arguments to the residual litigation are complex and a preliminary hearing to consider points of law was to have taken place in December 2011. The hearing was postponed at the request of the claimants and is now expected to start in October 2012. As the legal arguments to the residual litigation are complex and proceedings are still at an early stage it is too early to assess liability.


Page 31

8. Usable Reserves

The health of the Joint Committee’s finances is determined by more than the in-year performance. The various provisions and balances within the Joint Committee’s balance sheet are also of vital importance to TWAM. It is the existence of these provisions and balances which help TWAM maintain stability and withstand unexpected financial events.

Balance at

1 April 2011

Reserve

Applied

Contribution

to ReservesInterest

Balance at 31

March 2012

£ £ £ £ £

Acquisitions Reserve (227,371) 0 (930) (3,701) (232,002)

Renewals Reserve (185,560) 800 (1,000) (2,894) (188,654)

Business Partners Reserve (66,716) 0 (8,934) (1,118) (76,768)

Museums Earmarked Balances (1,094,825) 642,813 (124,796) (23,037) (599,845)

Future Repairs & Maintenance Reserve (129,595) 22,902 0 (1,193) (107,886)

Earmarked General Fund (1,704,067) 666,515 (135,660) (31,943) (1,205,155)

Grants Unapplied Account (258,800) 43,600 (64,717) 0 (279,917)

Total (1,962,867) 710,115 (200,377) (31,943) (1,485,072)

Acquisitions Reserve

In 2011/12 interest accruing on the fund balance, along with inflationary contributions have been added to the core fund and invested.

Renewals Reserve

The table below summarises the movements during 2011/12:

Balance at

1 April 2011

Reserve

Applied

Contribution

to ReservesInterest

Balance at 31

March 2012

£ £ £ £ £

Access (6,094) 800 0 (95) (5,389)

Information Technology (17,619) 0 0 (275) (17,894)

Transport (153,367) 0 0 (2,392) (155,759)

Regional Museums Store (8,480) 0 (1,000) (132) (9,612)

Total (185,560) 800 (1,000) (2,894) (188,654)

o Access: a fund to provide match funding for access scheme applications.

o Information Technology: a fund for the replacement of Information Technology items.

o Transport: a fund to finance the replacement of TWAM vehicles.

o Regional Museums Store Sinking Fund: the Agreement in respect of the Regional Museum Store (RMS) of 4 June 2001 between Beamish and TWAM obliged each partner to establish a sinking fund for periodic major repairs.

Business Partners Reserve

A fund to hold funds generated by businesses who support TWAM’s work through the Connecting through Culture programme. The interest accruing on the fund balance, along with unused contributions from business partners have been added to the core fund and invested.


Page 32

Museums Earmarked Balances

The funds within this reserve have been earmarked to support revenue expenditure and projects in future years. In total museums earmarked reserves have decreased by £494,980. It should be emphasised, that balances sit within the budgets of individual districts and there is, of course, no transfer between budgets of separate districts. Equally, balances on central funds are allocated centrally.

59% of Earmarked balances for 2011/12 were utilised during the year. Balances were utilised to fund the cost of pay in lieu of back pay arising from single status appeals, the deficit on the Archaeology Trading Unit, a number of severances associated with the workforce planning proposals and those earmarked for the exhibitions and public programmes, CCTV equipment replacement, market research both of users and non-users, and railway operations.

Future Repairs and Maintenance Reserve

This reserve holds sums required to carry out essential repairs to museums. In 2011/12, £22,902 of the reserve was utilised.

Grants Unapplied Account

This reserve holds grants received either with no conditions attached or the conditions have been satisfied so will not be clawed back by the Grant funder. In 2011/12, the reserve was increased by £21,117.

9. Other Operating Expenditure

The other operating expenditure shown in the Comprehensive Income &

Expenditure Statement consists of:

2010/11 2011/12

£ £

179,304 Trading - Archaeology 97,398

(383,962) Other Trading Operations (449,664)

(204,658) Total (352,266)


Page 33

10. Financing and Investment Income and Expenditure

The financing and investment income & expenditure shown in the Comprehensive Income & Expenditure Statement consists of:

2010/11 2011/12

£ £

Interest receivable and similar income : (10,945) Revenue operations (1,959)

(40,129) Cash held in Reserves (31,943)

(51,074) Total (33,902)

11. Non Specific Grant

The non specific grant income shown in the Comprehensive Income & Expenditure Statement consists of:

2010/11 2011/12

£ £

(6,769,615) Client contributions (6,410,392)

(6,769,615) Total (6,410,392)

Further detail is provided in Note 27.

12. Financial Instruments

The following categories of financial instrument are carried in the balance sheet:

31 March 31 March

2011 2012

£ £

0 0

0 0

Debtors:

Long-term debtors 66,975 57,502

Current debtors 2,114,401 1,075,208

Total debtors 2,181,376 1,132,710

Borrowings: 0 0

Creditors:

(419,581) (1,019,368)

Total creditors (419,581) (1,019,368)

Long term investments:

Short term investments:

Financial liabilities carried at contract

amount


Page 34

Income, Expense, Gains and Losses

Financial liabilities and financial assets represented by loans and receivables and long-term debtors and creditors are carried in the Balance Sheet at amortised cost. Their fair value can be assessed by calculating the present value of the cash flows that will take place over the remaining term of the instruments, using the following assumptions:

• Where an instrument will mature in the next 12 months, carrying amount is assumed to approximate to fair value; and

• The fair value of trade and other receivables is taken to be the invoiced or billed amount.

The fair values are calculated as follows:

Financial Liabilities

Carrying

amount

Fair

value

Carrying

amount

Fair

value

£ £ £ £

Creditors (419,581) (419,581) (1,019,368) (1,019,368)

(419,581) (419,581) (1,019,368) (1,019,368)

31 March 2011 31 March 2012

Financial Assets

Carrying

amount

Fair

value

Carrying

amount

Fair

value

£ £ £ £

Long-term debtors 66,975 66,975 57,502 57,502 Current debtors 2,136,441 2,114,401 1,076,730 1,075,208

2,203,416 2,181,376 1,134,232 1,132,710

31 March 2011 31 March 2012

The fair value of the debtors balance is the debt due to the Joint Committee minus the provision for doubtful debts.

13. Nature & Extent of Risks Arising from Financial Instruments

The Joint Committee’s activities expose it to a variety of financial risks:

• Credit risk: the possibility that other parties might fail to pay amounts due to the Joint Committee;

• Liquidity risk: the possibility that the Joint Committee might not have funds available to meet its commitments to make payments; and

• Market risk: the possibility that financial loss might arise for the Joint Committee as a result of changes in such measures as interest rates, market prices, foreign currency exchange rates etc.

The Joint Committee has a Service Level Agreement (SLA) with the Lead Authority for its treasury management. The Lead Authority’s overall risk management programme focuses on the unpredictability of financial markets and


Page 35

seeks to minimise potential adverse effects on the resources available to fund services. Risk management is carried out by a central treasury team, under policies approved by the Lead Authority in the Annual Treasury Management Strategy Statement. This Statement provides written principles for overall financial risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk and the investment of surplus cash. Credit risk - arises from deposits with banks and financial institutions, as well as credit exposure to the Joint Committee’s customers. Customers are assessed, taking into account their financial position, past experience and other factors, with individual credit limits being set in accordance with internal ratings and parameters set by the Joint Committee. Deposits are not made with banks and financial institutions unless they meet the relevant criteria as adopted within the Lead Authority’s Treasury Management Strategy. The Lead Authority’s investment priorities are the security of capital and the liquidity of its investments. The Lead Authority will also aim to achieve the optimum return on its investments commensurate with proper levels of security and liquidity.

The following analysis summarises the Joint Committee’s potential maximum exposure to credit risk on other financial assets, based on experience of default and recovery history over the last four financial years, adjusted to reflect current market conditions.

Amount at 31

March 2012

Historical

experience of

default

Historical

experience

adjusted for

market

conditions at

31 March

2012

Estimated

maximum

exposure to

default &

uncollectibility at

31 March 2012

Estimated

maximum

exposure at 31

March 2011

1,084,578£ 0.153% 0.205% 2,223£ 6,194£ However, as stated in Note 4, a review of significant balances suggested that an impairment of doubtful debts of £1.5k was more appropriate. Liquidity risk - as the Joint Committee has ready access to its investments, there is no significant risk that it will be unable to access finance to meet its commitments under financial instruments. Market risk - the Joint Committee is exposed to risk in terms of its exposure to interest rate movements on its investments. Movements in interest rates have a complex impact on the Joint Committee. For instance a rise in interest rates would have the following effects:

• investments at variable rates – the interest income credited to the Income & Expenditure Account will rise;

• investments at fixed rates – the fair value of the assets will fall. Treasury Management officers in the Lead Authority, in conjunction with external advisers, continually monitor both the prevailing interest rates and market


Page 36

forecasts and adopt the following responses to changes:

• if it were felt there was a significant risk of a sharp rise in long and short term rates then the portfolio position would be re-appraised with the likely action that fixed rate funding would be drawn whilst interest rates were still relatively cheap

• if it were felt that there was a significant risk of a sharp fall in long and short term rates then long term borrowings will be postponed, and potential rescheduling from fixed rate funding into short term funding will be considered.

Sensitivity to market interest rates: Changes in market interest rates affecting the fair value of financial assets and liabilities would have no impact on their carrying values as the Joint Committee currently has no financial instruments carried at fair value. However, the Joint Committee is required to disclose the impact that a hypothetical change in market interest rates during the year would have had on its recognised gains and losses. The extent to which the Joint Committee’s interest receivable would have been different had market interest rates during the year been 1% lower than they actually were, calculated based on the investments that the Joint Committee held during the year is as follows: Interest Rate Sensitivity

Actual Interest

Recognised in

Comprehensive

I&E Account at

31 March 2012

Interest

receivable

assuming 1%

decrease in

interest rates

Change

Interest receivable on investments (33,902) (12,512) 21,390

Foreign Exchange Risk The Joint Committee has no financial assets or liabilities denominated in foreign currencies and thus has no exposure to loss arising from movements in exchange rates.


Page 37

14. Intangible Assets

The Joint Committee accounts for its software as intangible assets, to the extent that the software is not an integral part of a particular IT system and accounted for as part of the hardware item of Property, Plant and Equipment. The intangible asset relates to purchased licenses and installation charges and will be written-off over a period of five years. The carrying amount of intangible assets is amortised on a straight-line basis. The amortisation charge in 2011/12 is equivalent to one fifth of the total cost of the software and was charged to the Cost of Service in the Comprehensive Income & Expenditure account.

The movement on Intangible Asset balances during the year is as follows:

2010/11 2011/12

Purchased

Licences

Purchased

Licences

£ £

0 70,796

70,796 54,363

0 (25,032)

70,796 100,127

70,796 125,159

0 (25,032)

70,796 100,127

Net carrying amount at start of year

Additions: Purchases

Accumulated amortisation

Amortisation for the period

Net carrying amount at end of year

Comprising:

Gross carrying amounts


Page 38

15. Inventories

Inventories represent the value of stock held in respect of the museum’s shops.

31 March 31 March

2011 2012

£ £

189,496 Balance outstanding at start of year 200,942

220,908 Purchases 283,953

(209,462) Recognised as an expense in the year (258,324)

0 Written off balances 0 0 Reversals of write-offs in previous years 0

200,942 Balance outstanding at year end 226,571

31 March 31 March

2011 2012

£ £


56,285 Purchases 79,269




31 March 31 March

2011 2012

£ £


277,193 Purchases 363,222




Total

University

Central & District

16. Debtors

16.1 Long-term Debtors

31 March 31 March

2011 2012

£ £

66,975 Long Term Debtors 57,502

66,975 57,502 Long term debtors fall due after a period of at least one year. This balance relates to a number of Archaeology debtors resulting from the suspension of projects at a stage when the full costs of the work undertaken to date cannot be charged, usually because a stage of work is incomplete. In all cases, the debt is considered to be recoverable but there is no certainty about when the


Page 39

projects will resume and it not expected that any of these projects will restart during 2012/13.

16.2 Short-term Debtors

31 March 31 March

2011 2012

£ £

741,803 Central Government bodies 307,194

307,975 Other local authorities 182,399

1,086,663 Other entities and individuals 587,137

(22,040) Bad Debt provision (1,522)

2,114,401 1,075,208

18,589 Payments in advance 7,849

2,132,990 1,083,057

Net debtors have decreased by £1,049,933 (49%) between years. Within the classification of ‘Central Government bodies’ debtors have decreased by £434,609 (59%). This fall has resulted from the changed method of funding of grant awards by MLA from quarterly in arrears to TWAM receiving 60% of each quarter’s profiled expenditure in advance. Within the classification ‘Other entities and individuals’ debtors have decreased by £499,526 (46%). There has been an overall decrease in debtors for archaeology schemes and externally funded projects. At 31 March 2012, corporate debt (i.e. invoices raised and issued as opposed to the year end debtors raised in the accounts to recognise income due) had fallen 71% (£681,036) to £282,200. As of 12 June 2012, 94% (£265,417) of corporate debts had been recovered leaving just £16,783 outstanding.

In 2011/12 the provision for doubtful debts decreased by £20,518 to £1,522. The decrease relates to the significant reduction in corporate debt and the Joint Committee’s improved performance in collecting debt in 2011/12. Less than 0.03% of all debt is now greater than 1 year old.

17. Cash and Cash Equivalents

The balance of Cash and Cash Equivalents is made up of the following elements:

31 March 31 March

2011 2012

£ £

10,625 Cash and Bank Balances 10,790

Cash Investment - regarded as:

1,704,067 cash equivalents 1,205,155

(1,463,606) bank overdraft (31,612)

251,086 1,184,333


Page 40

18. Short-Term Creditors

The table below shows an analysis of the Joint Committee’s creditors as at 31

March 2012.

31 March 31 March

2011 2012

£ £

0 Central Government bodies (12,525)

(41,065) Other local authorities (607,792)

0 Other Public Bodies (34,393)

0 Public Corporations and trading funds 0

(378,516) Other entities and individuals (364,658)

(419,581) (1,019,368)

(486,413) Receipts in advance (Note 27) (249,231)

(905,994) (1,268,599)

19. Provisions

At 31 March 2012, the Joint Committee, with the exception of the provision for

doubtful debts had no other provisions.

20. Usable Reserves

Movements in the Joint Committee’s usable reserves are detailed in the Movement in Reserves Statement (Note 8).

21. Unusable Reserves

31 March

2011

31 March

2012

£ £

179,324 Accumulated Absences Account 152,583

(70,796) Capital Adjustment Account (100,127)

108,528 52,456


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21.1 Accumulated Absences Account

The Accumulated Absences Account absorbs the differences that would otherwise arise on the General Fund Balance from accruing for compensated absences earned but not taken in the year e.g. annual leave entitlement carried forward at 31 March.

31 March 31 March

2011 2012

£ £

150,530 179,324

(150,530) (179,324)

179,324 152,583

28,794 (26,741)

179,324 152,583 Balance at 31 March

Balance at 1 April

Settlement or cancellation of accrual made at

the end of the preceding year

Amounts accrued at the end of the current year

Difference between officer remuneration

charged to Income & Expenditure Statement

and that accrued but not taken

21.2 Capital Adjustment Account

The Capital Adjustment Account absorbs the timing differences arising from the different arrangements for accounting for the consumption of non-current assets and for financing the acquisition, construction or enhancement of those assets under statutory provisions. The account is charged with the cost of the acquisition, construction or enhancement as depreciation, impairment losses and amortisations are charged to the Comprehensive Income and Expenditure Statement. The account is also reduced by the amounts set aside by the Joint Committee as finance for the costs of acquisition, construction and enhancement.

31 March 31 March

2011 2012

£ £

0 (70,796)

0 25,032

(70,796) (54,363)

(70,796) (100,127)Balance at 31 March

Capital grants and contributions credited to the

Comprehensive Income and Expenditure

Statement that have been applied to capital

financing

Capital financing applied in the year:

Balance at 1 April

Amortisation on intangilble assets


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22. Cash Flow Statement

Adjustments to net surplus or deficit on the provision of services for non cash movements

2010/11 2011/12

£ £

(195,100) Net Surplus or (Deficit) on the Provision of Services (421,723)

Adjustments to Surplus/(Deficit) on

Provision of Services for Non-Cash

Movements

0 Amortisation 25,032

(1,380,591) Increase/(Decrease) in Creditors 362,605

1,015,601 (Increase)/Decrease in Debtors 1,059,406

(14,969) (Increase)/Decrease in Stock (37,710)

(995,851) Contributions to/(from) Provisions 0

(1,570,910) 987,610

Operating Activities: The cash flows for operating activities include the following items:

2010/11 2011/12

£ £

(51,074) Interest received (33,902)

Investing Activities

2010/11 2011/12

£ £

(70,796)Purchase of property, plant and equipment,

investment property and intangible assets(54,363)

(70,796) Net Cash flows from investing activities (54,363)

There were no finance activities in the year.


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23. Amounts Reported for Resource Allocation Decisions

The analysis of income and expenditure by service expenditure for the year is

as follows4:

2010/11 Comparative Figures Core Activity NERMH Projects Total

Actual Actual Actual Actual

£ £ £ £

Income

Fees, charges & other service income 0 0 0 0

Interest and investment income 0 0 0 0

Government grants and contributions

DCMS Grant-in-Aid (1,443,501) 0 (2,255,089) (3,698,590)

Other Grants/Contributions (162,619) (1,985,917) (2,981,964) (5,130,500)

Other Income (144,951) (808) (166,065) (311,824)

Total Income (1,751,071) (1,986,725) (5,403,118) (9,140,914)

Expenditure

Employee expenses 5,956,011 1,332,438 841,654 8,130,103

Other service expenses 2,589,439 633,567 4,623,480 7,846,486

Central Support Services 287,884 26,642 925 315,451

Recharges 69,321 0 0 69,321

Total expenditure 8,902,655 1,992,647 5,466,059 16,361,361

Net Cost of Service 7,151,584 5,922 62,941 7,220,447

2011/12 Core Activity Renaissance Projects Total

Actual Actual Actual Actual

£ £ £ £

Income

Fees, charges & other service income 0 0 0 0

Interest and investment income 0 0 0 0

Government grants and contributions

DCMS Grant-in-Aid (1,394,012) 0 (523,988) (1,918,000)

Other Grants/Contributions (167,075) (1,916,180) (1,401,853) (3,485,108)

Other Income (198,159) (1,160) (152,144) (351,463)

Total Income (1,759,246) (1,917,340) (2,077,985) (5,754,571)

Expenditure

Employee expenses 6,114,975 1,316,209 550,568 7,981,752

Other service expenses 2,606,019 572,628 1,422,867 4,601,514

Central Support Services 294,917 26,953 290 322,160

Recharges 67,428 0 0 67,428

Total expenditure 9,083,339 1,915,790 1,973,725 12,972,854

Net Cost of Service 7,324,093 (1,550) (104,260) 7,218,283

Reconciliation of Museums Income and Expenditure to Cost of Services in the Comprehensive Income and Expenditure Statement.

All items included in the Segmental Income and Expenditure statements are included in the Comprehensive Income and Expenditure Statement.

4 NERMH: North East Regional Museums Hub partnership was dissolved with effect from 30 June

2012 by the MLA. TWAM continue to receive support through the Renaissance programme during 2011/12.


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Reconciliation to Subjective Analysis

This reconciliation shows how the figures in the analysis of Archives and Museums income and expenditure relate to a subjective analysis of the (Surplus) or Deficit on the Provision of Services included in the Comprehensive Income and Expenditure Statement.

Segmental

Analysis

Trading

activities

outside the

Joint

Committee

Interest and

investment

income

Contributions

from

Constituent

Bodies Total £ £ £ £ £

Income

Fees, charges & other service income 0 (569,351) 0 0 (569,351)

Interest and investment income 0 0 (51,074) 0 (51,074)

Government grants and contributions:

DCMS Grant-in-Aid (3,698,590) 0 0 0 (3,698,590)

Other Grants/Contributions (5,130,500) (34,223) 0 (6,769,615) (11,934,338)

Other Income (311,824) (566,717) 0 0 (878,541)

Total Income (9,140,914) (1,170,291) (51,074) (6,769,615) (17,131,894)

Expenditure

Employee expenses 8,130,103 537,267 0 0 8,667,370

Other service expenses 7,846,486 412,648 0 0 8,259,134

Central Support Services 315,451 15,718 0 0 331,169

Recharges 69,321 0 0 0 69,321

Total expenditure 16,361,361 965,633 0 0 17,326,994

7,220,447 (204,658) (51,074) (6,769,615) 195,100

Segmental

Analysis

Trading

activities

outside the

Joint

Committee

Interest and

investment

income

Contributions

from

Constituent

Bodies Total £ £ £ £ £

Income

Fees, charges & other service income 0 (609,646) 0 0 (609,646)

Interest and investment income 0 0 (33,902) 0 (33,902)

Government grants and contributions:

DCMS Grant-in-Aid (1,918,000) 0 0 0 (1,918,000)

Other Grants/Contributions (3,485,108) (40,596) 0 (6,410,392) (9,936,096)

Other Income (351,463) (593,441) 0 0 (944,904)

Total Income (5,754,571) (1,243,683) (33,902) (6,410,392) (13,442,548)

Expenditure

Employee expenses 7,981,752 443,818 0 0 8,425,570

Other service expenses 4,601,514 432,049 25,032 0 5,058,595

Central Support Services 322,160 15,550 0 0 337,710

Recharges 67,428 0 0 0 67,428

Total expenditure 12,972,854 891,417 25,032 0 13,889,303

7,218,283 (352,266) (8,870) (6,410,392) 446,755

(Surplus) or deficit on the provision of services

2011/12

(Surplus) or deficit on the provision of services

2010/11 Comparative Figures


Page 45

24. Trading Operations 2011/12

TWAM has established trading units where the service is required to operate in a commercial environment and generate income from other organisations or service users. Trading operations are incorporated into the Comprehensive Income and Expenditure Statement.

2010/11 2011/12 Change

£ £ £

TWM Archaeology Turnover (351,679) (306,379) 45,300

Expenditure 530,983 403,777 (127,206)

Deficit 179,304 97,398 (81,906)

Other trading operations Turnover (818,612) (937,304) (118,692)

Expenditure 434,650 487,640 52,990

Surplus (383,962) (449,664) (65,702)

(204,658) (352,266) (147,608)Net deficit/(surplus) on external trading

undertakings

TWM Archaeology carries out a full range of archaeological and heritage services to commercial developers. Other Trading Operations: Trading units include museum shops, archives activity, venue hire and café franchises. Income achieved under each activity is as follows:

2010/11 2011/12

£ £

Shop sales (557,164) (572,223)

Archives activity (67,536) (76,241)

Venue hire (83,808) (124,612)

Café franchises (68,395) (81,514)Other (41,709) (82,714)

Total (818,612) (937,304)

25. Officers’ Remuneration

The Joint Committee is required to disclose information on their employees’ remuneration in two sections. Full details are required for those employees defined in the Regulations as senior employees whose salary is above £50,000 per annum, and an additional summary disclosure is required of the numbers of other staff whose total remuneration excluding pensions contribution but including gross salary, expense allowances, supplements, compensation for loss of office (i.e. redundancy) and benefits, is above £50,000.

Senior employees: Senior employees are defined by the Regulations as those employees who have a role in the overall management of the Joint Committee. The following officers fall within the definition of senior employees and received an annual salary of above £50,000:


Page 46

Senior employees’ remuneration

Salary

Compensation

for loss of

employment

Taxable

Expenses

Employers

Pension

Contributions

Total

Remuneration

2010/11

Acting Director of TWAM 50,688 - 229 7,705 58,622

Director of TWAM 27,887 - 2 4,239 32,128

Senior Manager (1) 58,487 - - 6,680 65,167

Senior Manager (2) 51,174 - - 6,680 57,854

Senior Manager (3) 57,612 - - 6,680 64,292

2011/12

Director of TWAM 82,069 - 321 11,982 94,372

Senior Manager (2) 56,875 36,660 - 6,833 100,368

Employment Period

1 April 2010 to 24 November 2010

25 November 2010 to 31 March 2011

1 April 2010 to 31 March 2011





General Notes:

• No bonuses were paid during 2010/11 and 2011/12.

As a result of Single Status the salary figures in 2010/11 for senior managers include payments in lieu of back pay and an element of back pay was also made to senior manager (2) during 2011/12. In 2010/11, the Acting Director of TWAM and the Director of TWAM was the same person. Further detail on compensation for loss of employment is included in Note 31.

Other employees: The table below shows the number of staff whose total remuneration exceeded £50,000 in bands of £5,000. To aid transparency the bracketed figures under ‘Other employees’ indicates those who also received redundancy within their remuneration.

2010/11 2011/12

£70,000 - £74,999 0 1 (1)

0 1 (1)

Number of OfficersRemuneration Band


Page 47

26. External Audit Costs

The Joint Committee has incurred the following costs in relation to the audit of the Statement of Accounts.

2010/11 2011/12

£ £

27,900

Fees payable to Deloitte LLP with regard to external

audit services carried out by the appointed auditor for

the year. 24,273

0 Rebate of fees received from the Audit Commission in

respect of 2010/11.(1,942)

27,900 22,331

27. Grant Income

The Joint Committee credited the following grants, contributions and donations to the Comprehensive Income and Expenditure Statement:

2010/11 2011/12 £ £

Contributions from:

Gateshead (545,020) (535,868)

Newcastle (2,413,090) (2,298,200)

North Tyneside (777,590) (734,046)

South Tyneside (783,034) (731,184)

Sunderland (1,530,961) (1,452,077)

Newcastle University (719,920) (659,017)

Total (6,769,615) (6,410,392)

Credited to Services: 2010/11 2011/12 £ £

MLA (2,303,222) (1,940,900)

DCMS Grant in Aid (4,165,846) (1,918,000)

Heritage Lottery Fund (588,948) (417,392)

Trust Funds (278,173) (234,603)

Acquisitions Grants (48,865) (11,740)

Other District Contributions (23,332) (11,519)

Sponsorship (65,038) (38,642)

Donations (47,403) (71,353)Other Grants (1,308,263) (758,959)

(8,829,090) (5,403,108)

Credited to Non Specific Grant Income:


Page 48

The Joint Committee has received a number of grants, contributions and donations that have yet to be recognised as income as they have conditions attached to them that may require the monies or property to be returned to the funder. These balances are included within short-term creditors (Note 18). The balances at the year-end are as follows:

Revenue Grants Receipts In Advance 2010/11 2011/12 £ £

MLA (16,534) (12,796)

Creativity,Culture & Education (343,949) (24,478)

Heritage Lottery Fund (74,205) (61,905)

Other Grants (51,725) (57,605)Newcastle University 0 (92,447)

(486,413) (249,231)

28. Related Parties

The Joint Committee is required to disclose material transactions with related parties – bodies or individuals that have the potential to control or influence the Joint Committee or to be controlled or influenced by the Joint Committee. Disclosure of these transactions allows readers to assess the extent to which the Joint Committee might have been constrained in its ability to operate independently or might have constrained another party’s ability to bargain freely with the Joint Committee. Central government has effective control over the general operations of the Joint Committee – it is responsible for providing the statutory framework within which the Joint Committee operates, provides significant funding in the form of grants and prescribes the terms of many transactions which the Joint Committee has with other parties. The five councils within Tyne & Wear provide significant funding in the form of contributions and appoint members to the Joint Committee. Details of income received from government departments and the five councils are set out in Note 27.

Members of the Joint Committee have direct control over the Joint Committee’s financial and operating policies. During 2011/12, works and services to the value of £686,972 (£918,123 in 2010/11) and income totalling £853,699 (£886,960 in 2010/11) were received from organisations in which members had an interest.

Officers of the Joint Committee declared pecuniary interest in accordance with section 117 of the Local Government Act 1972 in transactions with eight organisations. The value of works and services was £57,599 (£13,971 in 2010/11) and income totalling £19,071 (£80,213 in 2010/11) was received.

Contracts were entered into in full compliance with the Joint Committee’s standing orders. Grants were received with proper consideration of the declarations of interest. The relevant members did not take part in any discussion or decision relating to these transactions.

The tables below summarise the value of any related party transactions greater than £5,000.


Page 49

Income Expenditure Total

£ £ £

Newcastle University (729,099) 861,830 132,731

Generation 2012 Legacy Trust (71,621) 0 (71,621)

Arts Council England (67,263) 0 (67,263)

Northern Rock Foundation (41,911) 0 (41,911)

Newcastle Gateshead Initiative (28,847) 800 (28,047)

Beamish Museum (26,871) 8,981 (17,890)

Royal Society for the Arts (10,616) 0 (10,616)

Journal Tyne Theatre (9,000) 0 (9,000)

Northern Region Film & Television Archive (8,592) 0 (8,592)The National Trust 0 9,535 9,535

Total (993,820) 881,146 (112,674)

Income Expenditure Total

£ £ £

Newcastle University (813,803) 659,017 (154,786)

Durham Wildlife Trust (15,000) 1,784 (13,216)

Customs House Trust (13,250) 900 (12,350)

Durham University 0 31,032 31,032

Audio Visual Arts North East 0 16,000 16,000

Bedes World 0 10,340 10,340

Museums Association (10,000) 3,731 (6,269)

Beamish Museum 0 6,717 6,717

ERIC North East (6,000) 0 (6,000)Newcastle Gateshead Initiative (5,000) 0 (5,000)

Total (863,053) 729,521 (133,532)

2010/11

2011/12

Amounts owed to the Joint Committee by related parties at 31 March 2012 were £140,390 and the Joint Committee owed related parties £14,215.

Amounts owed

to the Joint

Committee at

31 March 2012

£

Newcastle University (140,390)

Total (140,390)

Amounts owed

by the Joint

Committee at

31 March 2012

£

Bedes World 4,340 Beamish Museum 9,875

Total 14,215


Page 50

29. Capital Expenditure and Capital Financing

Capital expenditure on intangible assets incurred in the year is shown in the table below, together with the resources that have been used to finance it.

2010/11 2011/12 £ £

Opening Capital Financing Requirement: 0 0

Capital Investment:

Intangible assets 70,796 54,363

Sources of Finance:

MLA Renaissance Grant (70,796) 0

DCMS Capital 0 (54,363)

Closing Capital Financing Requirement: 0 0

30. Leases

Authority as Lessee:

Finance Leases

TWAM does not hold any material finance leases.

Operating Leases

The Joint Committee has entered into operating leases with lives ranging from two to six years.

The future minimum lease payments due under non-cancellable leases in future years are:

2010/11 2011/12 £ £

8,727 Not later than one year 7,419

13,034 Later than one year and not later than five years 4,138 0 Later than five years 0

21,761 11,557

The expenditure charged to the Comprehensive Income and Expenditure Statement during the year in relation to these leases was:

2010/11 2011/12 £ £

8,440 Minimum lease payments 8,008

8,440 8,008


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31. Termination Benefits

The Joint Committee terminated the contracts of 35 employees in 2011/12 (0 in 2010/11), incurring liabilities of £385,196 including £79,540 Strain on the Fund payments (Both £0 in 2010/11). This was payable to employees who were made redundant as part of the Joint Committee’s rationalisation of services or the result of the ending of grant funded projects. Strain on the Fund payments are charged to the Comprehensive Income & Expenditure Statement over three years.

In the table below is a new requirement under the Code of Practice and includes costs for employees whose contracts have been terminated and contracts of those the Joint Committee are demonstrably committed to terminate.

The numbers of exit packages with total cost per band and total cost of the compulsory and other redundancies are set out in the table below.

2010/11 2011/12 2010/11 2011/12 2010/11 2011/12 2010/11 2011/12

£ £

£0 - £20,000 0 17 0 13 0 30 0 233,322 £20,001 - £40,000 0 2 0 3 0 5 0 151,874

0 19 0 16 0 35 0 385,196

Total cost of Exit

Packages agreed

Exit Package cost band

(including Special payments)Number of

Compulsory

Redundancies

Number of other

departures agreed

Total Number of Exit

Packages agreed

The total cost of £385,196 in the table above includes £200,903 for exit packages that have been agreed, accrued for in 2011/12 but where the payment to the recipient actually occurred in 2012/13.

32. Defined Benefit Pension

Newcastle City Council employs all the Joint Committee’s staff. The IAS19 liabilities relating to these staff are therefore included in Newcastle City Council’s accounts and it is not practical to identify the liability relating to staff working for the Joint Committee separately. As a result, although the pension scheme is a defined benefit scheme, it has been accounted for in the Joint Committee’s accounts as a defined contribution scheme. The details of the recharges are set out below:


Page 52

2010/11 2011/12 Change

£861,743 £712,294 (£149,449)

15.2% 14.6% (0.6%)

£85,093 £79,476 (£5,617)

1.5% 1.6% 0.1%

293 264 (29)

being percentage of pensionable pay

Number of employees in scheme

being percentage of pensionable pay

Added years benefits and related

increases

Ordinary employers contributions

(payable to the Tyne and Wear

Superannuation Fund)

• The decrease between years primarily reflects additional payments made under Single Status in 2010/11.

• The contribution rate in 2011/12 was determined by the Fund’s actuary based on the latest valuation as at 31 March 2010.

• The above figures have been provided by the actuaries to the Tyne & Wear Pension Fund using information provided by the scheme and assumptions determined by Newcastle City Council in conjunction with the actuary.

• Actuarial calculations involve estimates based on assumptions about events and circumstances in the future, which may mean that the result of actuarial calculations may be affected by uncertainties within a range of possible values.

• Further information can be found in the Tyne and Wear Pension Fund Annual Report which is available upon request from South Tyneside Council, Town Hall and Civic Offices, Westoe Road, South Shields, NE33 2RL.

33. Central Support Services

Newcastle City Council as the ‘lead’ authority provides the Joint Committee with support services principally in the areas of accountancy, internal audit, ICT, human resources, health & safety, democratic and legal services. The charges are allocated on the basis of Service Level Agreements. The amounts payable in 2011/12 were £299,829 (2010/11 £287,551). This increase includes the inclusion of a new SLA for insurance services, increased ICT support and charges from occupational health services.


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34. Accounting Policies

General Principles The Statement of Accounts summarises the Joint Committee’s transactions for the 2011/12 financial year and its position at the year-end of 31 March 2012. The Joint Committee is required to prepare an annual Statement of Accounts by the Accounts and Audit Regulations 2011, which those Regulations require to be prepared in accordance with proper accounting practices. These practices primarily comprise the Code of Practice on Local Authority Accounting in the United Kingdom 2011/12 and the Service Reporting Code of Practice 2011/12, supported by International Financial Reporting Standards (IFRS). The accounting convention adopted in the Statement of Accounts is principally historical cost, modified by the revaluation of certain categories of non-current assets and financial instruments. Reserves and Provisions Reserves The Joint Committee sets aside specific amounts as reserves for future policy purposes or to cover contingencies. Reserves are created by appropriating amounts in the Movement in Reserves Statement. When expenditure to be financed from a reserve is incurred, it is charged to the appropriate revenue account in that year against the Surplus or Deficit on the Provision of Services in the Comprehensive Income and Expenditure Statement. The reserve is then appropriated back into the Movement in Reserves Statement so that there is no net charge against current year contributions for the expenditure.

Certain reserves are kept to manage the accounting processes for financial instruments, retirement and employee benefits and do not represent usable resources for the Joint Committee - these reserves are explained in the relevant notes. Provisions Provisions are made where an event has taken place that gives the Joint Committee a legal or constructive obligation that probably requires settlement and a reliable estimate can be made of the amount of the obligation. Provisions are charged as an expense to the appropriate service line in the Comprehensive Income and Expenditure Statement in the year that the Joint Committee becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet. Estimated settlements are reviewed at the end of each financial year. Where it becomes less than probable that a settlement will now be required (or a lower settlement than anticipated is made), the provision is reversed and credited back to the relevant service. Where some or all of the payment required to settle a provision is expected to


Page 54

be recovered from another party (e.g. from an insurance claim), this is only recognised as income if it is virtually certain that reimbursement will be received.

Accruals of Income & Expenditure Activity is accounted for in the year in which it takes place, not simply when cash payments are made or received. In particular:

• Revenue from the sale of goods is recognised when the Joint Committee transfers the significant risks and rewards of ownership to the purchaser and it is probable that consideration will flow to the Joint Committee;

• Revenue from the provision of services is recognised when the Joint Committee can measure reliably the percentage completion of the transaction and it is probable that consideration will flow to the Joint Committee;

• Supplies of stock are recorded as expenditure when they are consumed. Where there is a gap between the date supplies are received and their consumption they are carried as inventories on the balance sheet;

• Expenses in relation to services received (including services provided by employees) are recorded as expenditure when the services are received rather than when payments are made;

• Interest receivable on investments is accounted for on the basis of the effective interest rate for the relevant financial instrument rather than the cash flows fixed or determined by the contract;

• Where revenue and expenditure have been recognised but cash has not been received or paid, a debtor or creditor for the relevant amount is recorded in the balance sheet. The Joint Committee has adopted a de minimis level of £500 for creditors which means that they are not included in the accounting statements below this level. Generally a full year’s charge is included in the accounts for those supplies and services used continuously and charged on a periodic basis (e.g. gas, electricity and water), but the period covered by the payments does not always coincide with the financial year.

Exceptional Items When items of income and expense are material, their nature and amount is disclosed separately, either on the face of the Comprehensive Income and Expenditure Statement or in the notes to the accounts, depending on how significant the items are to an understanding of the Joint Committee’s financial performance. Government Grants and Contributions (Revenue) Whether paid on account, by instalments or in arrears, government grants and third party contributions and donations are recognised as due to the Joint Committee when there is reasonable assurance that:

• The Joint Committee will comply with the conditions attached to the payments; and

• The grants or contributions will be received.


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Amounts recognised as due to the Joint Committee are not credited to the Comprehensive Income and Expenditure Statement until conditions attached to the grant or contribution have been satisfied. A condition exists where there are stipulations that grant money can be clawed back by the funder if the terms of the grant are not adhered to. Monies advanced as grants and contributions for which conditions have not been satisfied are carried in the Balance Sheet as creditors. When conditions are satisfied, the grant or contribution is credited to the relevant service line in the Comprehensive Income and Expenditure Statement. Intangible Assets Expenditure on non-monetary assets that do not have physical substance but are controlled by the Joint Committee as a result of past events (e.g. software licences) is capitalised when it is expected that future economic benefits or service potential will flow from the intangible asset to the Joint Committee. Intangible assets are measured initially at cost. Amounts are only revalued where the fair value of the assets held by the Joint Committee can be determined by reference to an active market. In practice, no intangible asset held by the Joint Committee meets this criterion, and they are therefore carried at amortised cost. The depreciable amount of an intangible asset is amortised over its useful life in the Comprehensive Income and Expenditure Statement. An asset is tested for impairment whenever there is an indication that the asset might be impaired – any losses recognised are posted in the Comprehensive Income and Expenditure Statement. Any gain or loss arising on the disposal or abandonment of an intangible asset is posted to the Other Operating Expenditure line in the Comprehensive Income and Expenditure Statement.

Where expenditure on intangible assets qualifies as capital expenditure for statutory purposes, amortisation, impairment losses and disposal gains and losses are not permitted to have an impact on the General Fund Balance. The gains and losses are therefore reversed out of the General Fund Balance in the Movement in Reserves Statement and posted to the Capital Adjustment Account and (for any sale proceeds greater than £10,000) the Capital Receipts Reserve. The only category of intangible assets for the Joint Committee is software; the asset life used for software is 5 years. Fixed Assets The buildings in which the Archives and Museums are housed are the property of the constituent authority, and are therefore excluded from TWAM’s balance sheet. Museum exhibits purchased before local government re-organisation in 1974 are the property of the constituent authority, which succeeded the local authority owning the exhibit prior to re-organisation. Exhibits purchased by the former Tyne and Wear Metropolitan County Council and the Joint Committee


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are held by Newcastle City Council and are placed at the disposal of the Joint Committee in the interests of all the constituent authorities. All records and archives acquired on behalf of the Joint Committee together with the records and archives acquired by the former Tyne and Wear Metropolitan County Council and the Joint Committee are held by Newcastle City Council as Trustee for the joint use and benefit of all of the Constituent Councils

The value of records, archives and exhibits is excluded from the balance sheet because the Joint Committee’s legal status does not allow ownership.

Heritage Assets The Code has introduced a change in accounting policy in relation to the treatment of heritage assets which impacts on the treatment of those heritage assets managed by the Joint Committee on behalf of the five councils in Tyne & Wear. The new standard requires that a new class of asset, heritage assets, is disclosed separately in an entity’s balance sheet. The Joint Committee’s legal status does not allow ownership of ‘assets’, therefore, heritage assets will be included in the balance sheets of the five local authorities, alongside any other appropriate disclosures required under FRS 30. Assets have been allocated to the five local authorities based on the methodology laid out in the Joint Agreement. Although TWAM does not own these assets, and therefore does not include them in its balance sheet, it does hold these heritage assets and consequently these accounts make the disclosures required of FRS30. Heritage assets are assets that are held ‘principally for their contribution to knowledge or culture’. The collections are not currently valued in their entirety with only the Art collection being valued within the Joint Committee’s financial statements for 2011/12. This is due to a number of factors such as the lack of information on purchase price, the unavailability of comparable market values, the diverse nature of the objects and the volume of objects held. The collections are held in the asset register of the Joint Committee.

It is not practicable to value the remaining collections as this would incur a disproportionate cost, even if it were possible, that cost would not be commensurate with any benefits to the organisation or its users. This exemption is permitted by the Code.

Leases Leases are classified as finance leases where the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the property, plant or equipment from the lessor to the lessee. All other leases are classified as operating leases.


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Where a lease covers both land and buildings, the land and buildings elements are considered separately for classification. Arrangements that do not have the legal status of a lease but convey a right to use an asset in return for payment are accounted for under this policy where fulfilment of the arrangement is dependent on the use of specific assets.

Finance Leases The Joint Committee does not hold any material finance leases.

Operating Leases Rentals paid under operating leases are charged to the Comprehensive Income and Expenditure Statement as an expense of benefitting from use of the leased property, plant or equipment. Charges are made on a straight-line basis over the life of the lease, even if this does not match the pattern of payments (e.g. there is a rent-free period at the commencement of the lease).

Employee Costs The Joint Committee employees are employed by the Lead Authority, Newcastle City Council. Employee costs in the Revenue Account include all direct salaries and wages, employers’ contributions for National Insurance and pension costs. The Joint Committee’s employees consist of curators, archivists, officers, drivers, and visitor services personnel. The costs of certain technical and professional staff are charged initially to various holding accounts from which a recharge is made to the appropriate service such as transport or premises, to capital projects or to an outside agency. Benefits Payable during Employment Short-term employee benefits are those due to be settled within 12 months of the year-end. They include such benefits as wages and salaries, paid annual leave and paid sick leave, bonuses and non-monetary benefits for current employees and are recognised as an expense for services in the year in which employees render service to the Joint Committee. An accrual is made for the cost of holiday entitlements (or any form of leave, e.g. time off in lieu) earned by employees but not taken before the year-end which employees can carry forward into the next financial year. The accrual is made at the wage and salary rates applicable in the following accounting year, being the period in which the employee takes the benefit. The accrual is charged to Surplus or Deficit on the Provision of Services, but then reversed out through the Movement in Reserves Statement so that holiday benefits are charged to revenue in the financial year in which the holiday absence occurs.

Termination Benefits Termination benefits are amounts payable as a result of a decision by the Joint Committee to terminate an officer’s employment before the normal retirement date or an officer’s decision to accept voluntary redundancy and are charged on an accruals basis to the Cost of Service line in the Comprehensive Income and Expenditure Statement when the Joint Committee is demonstrably committed to the termination of the employment of an officer or group of officers or making an offer to encourage voluntary redundancy.


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The Local Government Pension Scheme Employees of TWAM are admitted to the Tyne and Wear County Pension Fund, which is administered by South Tyneside Council under the Local Government Pension Regulations 1997. The scheme is a defined benefit type whereby benefits are based on employee pensionable remuneration and length of service. The scheme’s assets are held within the Tyne and Wear County Pension Fund. Contributions to the scheme are set by an independent actuary at a rate designed to eliminate any surplus or deficit in the fund, based on a three yearly valuation. The funds website may be visited at www.twpf.info

The Code requires that the cost of services should bear the current service cost of employees. However, as stated above, the Joint Committee employees are employed by the Lead Authority, Newcastle City Council, therefore, current service cost of these employees is borne by Newcastle City Council and disclosed in Newcastle City Council’s accounts. Recharges As the buildings in which the Archives and Museums are housed are the property of the constituent authorities, any financing charges due in respect of the Archives and Museums are paid by the individual authorities and appear as recharges to the Joint Committee. Inventories, Stores and Work in Progress Inventories and work in progress are valued at the lower of cost or net realisable value. Cost is based on ‘latest invoice price’ and issues have been charged into the accounts on the same basis.

Cost of Support Services The costs of central support e.g. Accountancy, Human Resources and Legal Services, have been allocated to the Joint Committee on the basis of Service Level Agreements in accordance with the guidance given by CIPFA in the SeRCOP. In line with CIPFA guidance, the cost of corporate management is not charged to services. Insurance The insurance for the Joint Committee is arranged through Newcastle City Council, and is a separate bespoke policy. All premiums relating to the cover are charged to the Joint Committee’s revenue account. Deficit/Surplus for the year The deficit/surplus represents the position before transfers to and from reserves, which are required to meet commitments. Under the Joint Committee’s current budgetary framework, which has been in place for many years, the opportunity exists to carry forward surpluses and deficits into the following year. It is considered prudent to allow surpluses to be carried forward


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in this way as it promotes planned spending of resources rather than forced spending within the constraints of any given financial year. Value Added Tax VAT payable is included as an expense only to the extent that it is not recoverable from HM Revenue & Customs. VAT receivable is excluded from income. Former Tyne and Wear County Council Debt The Joint Committee's revenue accounts include a recharge from the constituent authorities for the share of the debt of the former County Council relating to Archives and Museums. Principal, interest and debt management expenses are recharged to the successor districts on a population basis. Investments Investments are limited to approved investments in accordance with Department of Communities & Local Government Guidance on Local Government Investment and CIPFA’s Treasury Management Code. Such investments are shown in the Balance Sheet at fair value. Interest Interest is earned by the Joint Committee in respect of the investment of reserves which are invested in the money market until required. Doubtful Debts The write-off of debt is part of the normal accounting process. Write-off can occur in circumstances where the debts are unlikely to be collected for a number of reasons, e.g. the death of the debtor, uneconomical to collect, on legal advice or where the debtor is untraceable. Although it is good accounting practice for debts to be written off in the accounts to reflect a more accurate view of the fair value of trade debtors, they will still be pursued and recovered if the opportunity arises. The Treasurer to the Joint Committee may write-off amounts under £2,000 using delegated powers. Annually a report is submitted to the Audit Committee summarising the items written-off under delegated powers. Accounts written off in excess of £2,000 are submitted to the Joint Committee for approval once TWAM is satisfied that all appropriate measures have been taken to try to recover the debt. The cost of the write-off is met from the provision for doubtful debts.


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Financial Instruments Financial Assets The financial assets of the Joint Committee are all held at fair value and are:

• Sundry Debtors

• Cash and Cash Equivalents

Financial Liabilities The financial liabilities of the Joint Committee are all held at fair value and are:

• Sundry Creditors Contingent Liabilities A contingent liability arises where an event has taken place that gives the Joint Committee a possible obligation whose existence will only be confirmed by the occurrence or otherwise of uncertain future events not wholly within the control of the Joint Committee. Contingent liabilities also arise in circumstances where a provision would otherwise be made but either it is not probable that a settlement of resources will be required or the amount of the obligation cannot be measured reliably. Contingent liabilities are not recognised in the Balance Sheet but disclosed in a note to the accounts. Events after the Balance Sheet Date Events after the Balance Sheet date are those events, both favourable and unfavourable, that occur between the end of the reporting period and the date when the Statement of Accounts is authorised for issue. Two types of events can be identified:

• Those that provide evidence of conditions that existed at the end of the reporting period– the Statement of Accounts is adjusted to reflect such events; and

• Those that are indicative of conditions that arose after the reporting period – the Statement of Accounts is not adjusted to reflect such events, but where a category of events would have a material effect, disclosure is made in the notes of the nature of the events and their estimated financial effect.

Events taking place after the date of authorisation for issue are not reflected in the Statement of Accounts. Cash and Cash Equivalents Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in no more than three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.


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In the Cash Flow Statement, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Joint Committee’s cash management. Prior Period Adjustments, Changes in Accounting Policies and Estimates and Errors Prior period adjustments may arise as a result of a change in accounting policies or to correct a material error. Changes in accounting estimates are accounted for prospectively, i.e. in the current and future years affected by the change and do not give rise to a prior period adjustment. Changes in accounting policies are only made when required by proper accounting practices or the change provides more reliable or relevant information about the effect of transactions, other events and conditions on the Joint Committee’s financial position or financial performance. Where a change is made, it is applied retrospectively (unless stated otherwise) by adjusting opening balances and comparative amounts for the prior period as if the new policy had always been applied. Material errors discovered in prior period figures are corrected retrospectively by amending opening balances and comparative amounts for the prior period.

Carbon Reduction Commitment Scheme The Joint Committee is required to participate in the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme. This scheme is currently in its introductory phase which will last until 31 March 2014. The five local authorities for whom the Joint Committee manages archives, museums and art galleries are required to purchase and surrender allowances, currently retrospectively, on the basis of emissions i.e. carbon dioxide produced as energy is used. As carbon dioxide is emitted, a liability and an expense are recognised. The liability will be discharged by surrendering allowances. The liability is measured at the best estimate of the expenditure required to meet the obligation, normally at the current market price of the number of allowances required to meet the liability at the reporting date. The cost to the Joint Committee is recognised and reported in the costs of the Joint Committee’s services and is apportioned to services on the basis of energy consumption.


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Statement of Responsibilities for the Statement of Accounts The Joint Committee's Responsibilities The Joint Committee is required:

• To make arrangements for the proper administration of its financial affairs and to secure that one of its officers has the responsibility for the administration of those affairs. In TWAM, that officer is the Treasurer to the Joint Committee;

• To manage its affairs to secure economic, efficient and effective use of resources and safeguard its assets;

• To approve the Statement of Accounts.

The Treasurer to the Joint Committee's Responsibilities The Treasurer to the Joint Committee is responsible for the preparation of TWAM’s Statement of Accounts in accordance with proper practices as set out in the CIPFA (Chartered Institute of Public Finance & Accountancy) Code of Practice on Local Authority Accounting in the United Kingdom (the Code).

In preparing this Statement of Accounts, the Treasurer to the Joint Committee has:

• Selected suitable accounting policies and then applied them consistently.

• Made judgements and estimates that were reasonable and prudent.

• Complied with the Code.

The Treasurer to the Joint Committee has also:

• Kept proper accounting records which were up to date.

• Taken reasonable steps for the prevention and detection of fraud and other irregularities.

Certification of the Accounts

I certify that the Statement of Accounts gives a true and fair view of the financial position of the Joint Committee at 31 March 2012 and its income and expenditure for the year ended 31 March 2012.

Signed: P. V. Woods Treasurer to the Joint Committee 27 September 2012


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Annual Governance Statement

1. Scope of responsibility Tyne & Wear Archives & Museums (TWAM) has approved and adopted a Code of Corporate Governance, which is consistent with the principles of the CIPFA/ SOLACE Framework Delivering Good Governance in Local Government. A copy of the code can be viewed on TWAM’s website at http://www.twmuseums.org.uk/about/corporatedocuments/governance-arrangements/ , or can be obtained from the Head of Finance, Governance and Resources, Tyne & Wear Archives & Museums, Discovery Museum, Blandford Square, Newcastle upon Tyne, NE1 4JA. The Code evidences our commitment to achieving good governance and demonstrates how we comply with the governance standards recommended by CIPFA. As part of the continuing review and improvement process, TWAM updates its Local Code annually to reflect key changes in its governance arrangements. Throughout 2011/12, the TWAM senior management team (SMT) has regularly reviewed the Local Code in order to identify any changes required or particular issues arising.

TWAM is responsible for ensuring that its business is conducted in accordance with the law and appropriate standards. It must ensure that public money is safeguarded, properly accounted for, and used economically, efficiently and effectively. TWAM also has a duty, under the Local Government Act 1999, to make arrangements to secure continuous improvement in the way in which its functions are exercised, having due regard to a combination of economy, efficiency and effectiveness. In discharging this overall responsibility, TWAM is responsible for putting in place proper arrangements for the governance of its affairs, including arrangements for the management of risk to a reasonable level, thereby facilitating the effective exercise of its functions. It cannot eliminate all risk of failure to achieve policies, aims and objectives and can therefore only provide reasonable and not absolute assurance of effectiveness.

This statement explains how TWAM has complied with the Code and how it meets the requirements of regulation 4(2) of the Accounts and Audit Regulations 2003 as amended by the Accounts and Audit (Amendment) (England) Regulations 2006 in relation to the publication of a statement on internal control. It builds on last year’s Annual Governance Statement (AGS); changes outlined within this statement have been made to enhance, not replace, existing arrangements for governance.

2. The purpose of the governance framework

The governance framework comprises the systems and processes, culture and values by which TWAM is governed and managed. It also covers the ways in which TWAM engages with communities and is held accountable by users. It enables TWAM to monitor the achievement of its strategic objectives and to consider whether those objectives have led to the delivery of appropriate, cost-effective services. The system of internal control is a significant part of that framework and is designed to manage risk to a reasonable level.

The quality of governance arrangements underpins the levels of trust in public services and is therefore a fundamental building block upon which the


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organisation can build its commitment to users and stakeholders. Trust in public services is also influenced by the quality of services received, regardless of who is responsible for delivering them, and also by how open and honest an organisation is about its performance. Good governance, and a framework for the implementation of good governance allows the Joint Committee to be clear about its approach to discharging its responsibilities as outlined above and to promote this widely both internally, to officers and members, and externally to partners, stakeholders and most importantly the users of our services.

The arrangements required for gathering assurances for the preparation of the AGS provide an opportunity for the Joint Committee to consider the robustness of the governance arrangements in place and to consider this as a corporate issue that affects all parts of the organisation. It also helps to highlight those areas where improvement is required.

The governance framework has been in place at TWAM for the year ended 31 March 2012 and up to the date of approval of the Accounts.

3. The Governance Framework

The key elements of the systems and processes that comprise TWAM’s governance arrangements are described in the Code and are summarised below.

3.1 Identifying and communicating TWAM’s vision of its purpose and

intended outcomes for citizens and service users

TWAM has a commitment to maximising engagement with audiences. This is articulated through its mission, its vision and its commitment, all of which have been generated through wide consultation amongst stakeholders and staff and are endorsed by the Joint Committee.

Mission Statement Our mission is to help people determine their place in the world and define their identities, so enhancing their self-respect and their respect for others. Vision Our vision for the future is for everyone to have access to museum and archive provision in Tyne and Wear, to use this access and to value it for the significant and positive impact that it makes upon their lives. We will provide real or virtual, worldwide access to our museums and archives and their collections. Commitment Our commitment is to a World-class service that is innovative, imaginative, creative, totally inclusive, secure and sustainable.

3.2 Reviewing TWAM’s vision and its implications for TWAM’s governance

arrangements

TWAM reviews its mission, vision and commitment annually through the review of its Corporate Plan which is produced in consultation with key stakeholders and staff. The Plan sets out our five key priorities and identifies


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the key strategic objectives which will allow us to achieve these priorities:

• Contribute to the development of a sense of place and to the success. and sustainability of the area’s economy and environment;

• Strengthen TWAM as an organisation that is resilient and adaptable to change;

• Contribute to increasing the attainment and aspiration of children and young people;

• Support communities and enhance happiness, learning and wellbeing;

• Manage collections effectively to ensure that they are thriving and used as a dynamic resource.

There is continual review through Action Plan for Improvement reports to Audit Committee, internal and external audits, close working relationships with key partners and stakeholders and the risk review and monitoring process. TWAM conducts an annual review of the effectiveness of its system of internal control and governance arrangements, updates the Local Code and publishes the results in the AGS.

3.3 Measuring the quality of services for users, ensuring they are delivered

in accordance with TWAM’s objectives and ensuring that they represent the best use of resources

TWAM continues to perform strongly, delivering corporate priorities and maintaining service quality despite having to deliver a £1.4m cost reduction programme in 2011/12 and undergoing unprecedented levels of organisational change. This has not been an easy task and has been achieved by focussing on modernising, streamlining, consolidating as well as specific reductions in some functions no longer considered essential. External endorsement of the value for money provided by the Joint Committee was contained in the external auditor’s Annual Audit Letter and a due diligence review of TWAM carried out by Deloitte LLP on behalf of the Department for Culture, Media and Sport (DCMS) and Arts Council England (ACE) was positive.

Service quality is a TWAM-wide priority. Measures of service quality include the Annual Residents’ Survey, benchmarking of visitors, performance indicators, Visitor Attraction Quality Assurance Service (VAQAS), mystery shoppers and Customer Comments, Compliments and Complaints. Progress towards the achievement of objectives is monitored regularly by the SMT and by regular meeting with clients. An annual review is reported to the Joint Committee and in the Annual Report. The annual budget process includes an efficiency review, considers the impact on service users of all proposals, compares costs through benchmarking with our peers and identifies specific actions required to improve value for money which are then built into our budget.

TWAM’s Procurement Strategy ensures we procure goods and services in the most efficient and effective way. Performance measurement and


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management information 2011/12 includes DCMS, Renaissance targets and management performance indicators. Target setting for all indicators includes analysis of past and current performance, comparative performance and priorities identified through consultation with stakeholders, users and staff and checks are applied to ensure achievability. During 2011/12 TWAM introduced a strengthened performance framework to monitor venue performance on a monthly basis. There are a variety of different indicators being monitored, bracketed broadly under 'visitors', 'satisfaction', 'income', 'costs' and 'human resources'. The Framework’s focus is on what can be done to influence current and future performance as opposed to reviewing what has happened in the past and involves monthly meetings of relevant officers.

3.4 Defining and documenting the roles and responsibilities of the Joint

Committee, Audit Committee and officer functions, with clear delegation arrangements and protocols for effective communication

TWAM is a joint service of five local authorities (Newcastle, Sunderland, South Tyneside, North Tyneside, and Gateshead), with additional support and contributions from the DCMS. TWAM has a separate management agreement with Newcastle University, to manage the Great North Museum. It manages twelve museums and galleries and the archives for Tyne & Wear, on behalf of its clients; however, it is an autonomous body, client-centred but with its own management committee of elected members from the five authorities. The relationship between, and commitment of, the partners is enshrined in the Tyne & Wear Archives & Museums Joint Agreement 2009. The Joint Agreement lays out the terms and conditions of the relationship and the involvement of central government. A review of the Joint Agreement will take place during 2012/13. TWAM was the lead partner for the North East Regional Museums Hub (NERMH) which operated on behalf of a partnership which included the Museums, Libraries and Archives Council (MLA), Beamish: The Living Museum of the North, The Bowes Museum and Hartlepool Museums Service until its formal conclusion on 30th June 2011. TWAM continued to have responsibility for a number of regional Renaissance programmes delivered with MLA funding to the end of the year and was successful in securing funding until 2015 under the replacement ACE programme Major Partner Museums. Policy and decision making is undertaken by the Joint Committee and an approved plan of objectives for the forthcoming year is outlined in the Corporate Plan. Extensive consultation on priorities and options shapes the budget decisions that are made. The Joint Committee has delegated certain responsibilities to the Director, which are set out in the Financial Handbook.


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Decisions taken under delegated powers are reported on a regular basis to the Chair of the Joint Committee.

3.5 Developing, communicating and embedding codes of conduct, defining

the standards of behaviour for members and staff

The standards of conduct and behaviour expected of members and officers is set out in the Code of Conduct provided by Newcastle City Council, TWAM’s lead body, and is supported by training programmes for both members and staff. Employee contracts of employment, Induction Plans, Personal Development Plans, a Members Training Programme, a Trustee induction programme (for members of TWAM’s Development Trust) and the Dignity at Work Policy further support high standards of behaviour. To prevent members and employees from being influenced by prejudice, bias or conflicts of interest, we maintain and perform regular checks on our Register of Interests and Register of Gifts and Hospitality for both members and officers. This is supplemented by a Confidential Reporting Policy and a Counter Fraud Policy. An Ethics Policy will be introduced in 2012/13. The roles of the Joint Committee and the members of the SMT are published on the TWAM website. The Financial Regulations set out procedures to ensure objectivity, fairness and probity in the procurement process.

3.6 Reviewing and updating standing orders, standing financial instructions,

a scheme of delegation and supporting procedure notes/manuals, which clearly define how decisions are taken and the processes and controls required to manage risks

In order to ensure that decision makers have followed a proper process, all decisions are properly documented and taken with regard to all relevant considerations. Members and officers have all relevant information before decisions are made, including the outcome of constructive scrutiny and a detailed assessment of the risks to ensure that resources are used legally and efficiently. The system is based on a framework of annual budgeting and accounting, regular management information, financial regulations and procedure notes, administrative procedures (including segregation of duties), management supervision, and a system of delegation and accountability. TWAM has adopted a Risk Management Strategy, which was last reviewed and updated during February 2011 and requires the consideration of risks in relation to the achievement of delivery priorities (whether through services, projects or partnerships), in order to help provide assurance that aims will be met, resources are effectively used and areas of weakness are highlighted at


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an early stage. TWAM purchases appropriate levels of insurance cover from the insurance market, and participates in the Government Indemnity Scheme.

3.7 Undertaking the core functions of an audit committee, as identified in

CIPFA’s Audit Committees – Practical Guidance for Local Authorities

The Audit Committee is embedded as part of TWAM’s overall governance framework. Membership includes an independent chair, vice-chair and another independent member in addition to the local authority members nominated by the Joint Committee. The Audit Committee’s key responsibility is to seek evidence and obtain independent assurance on behalf of the Joint Committee that a comprehensive, coordinated and effective framework of internal control and corporate governance is maintained across the organisation. During 2011/12, the Audit Committee has considered the Head of Audit and Strategic Risk’s annual report and opinion, received regular updates on internal audit activity (actual and proposed), been kept up to date with the progress made against the Action Plan for Improvement, and in respect of the Statement of Accounts 2011/12, considered whether appropriate accounting policies have been followed and whether there are concerns arising from the financial statements or from the external audit that need to be brought to the attention of the Joint Committee. Annually the Audit Committee undertakes a self-assessment of its effectiveness and reports on the outcome to the Joint Committee. In 2011/12 the self-assessment concluded that there is considerable compliance with best practice guidance as advocated by CIPFA. Regular training is provided for members to support the effective implementation of their Terms of Reference. The work of the Audit Committee is demonstrated through its agendas and minutes which are available on TWAM’s website.

3.8 Ensuring compliance with relevant laws and regulations, internal

policies and procedures, and that expenditure is lawful

The Director is primarily responsible for ensuring compliance with established policies and procedures, breach of which could lead to legal challenge and loss for TWAM. TWAM has a service level agreement with Newcastle City Council’s Legal Services department which advises managers to ensure the lawfulness and fairness of decision making. Advice is also provided to members and officers on the likely impact of new legislation affecting TWAM and the legal implications of key decisions are highlighted. TWAM is subject to internal and external audit and inspection regimes. The Audit Committee ensures high standards of conduct throughout TWAM and


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oversees issues relating to governance and internal control. The Joint Committee’s financial arrangements fully conform to the governance requirements of the CIPFA Statement on the Role of the Chief Financial Officer in Local Government (2010). The Director of Finance and Resources at Newcastle City Council is the designated Chief Financial Officer (CFO) for the Joint Committee. He has seconded an officer, the Head of Finance, Governance & Resources, to the Joint Committee and she is a key member of the SMT and is responsible for ensuring the proper administration of the Joint Committee’s financial arrangements and leads a fully resourced and suitably qualified Finance Function. The CFO is actively involved in and able to bring influence to bear on all material business decisions to ensure immediate and long term implications, opportunities and risks, are fully considered and in alignment with the Corporate Plan. The CFO is also responsible for ensuring compliance with the requirements of the Accounts and Audit Regulations 2003 relating to accounting records, control systems and audit. TWAM has a service level agreement with Newcastle City Council’s internal audit service. The Joint Committee’s internal audit arrangements conform to the governance requirements of the CIPFA Statement on the Role of the Head of Internal Audit in Local Government. The Head of Audit and Strategic Risk (HoA&SR), at Newcastle City Council, works with key members of the TWAM SMT to give advice and promote good governance throughout TWAM. The HoA&SR leads and directs the Internal Audit provision so that it makes a full contribution to and meets the needs of the Joint Committee and external stakeholders, escalating any concerns and giving assurance on the Joint Committee’s control environment, TWAM’s financial regulations (and detailed financial procedure notes) set out the key features of TWAM’s system of internal financial control. Bi-monthly budget and performance monitoring reports are submitted to the Joint Committee setting out any significant decisions that require approval. The Director is the accounting officer to the DCMS in respect of the annual grant-in-aid provided by that body. TWAM adopted an Environmental Policy in 2010 to demonstrate our commitment to consider environmental factors in TWAM decisions and activities including giving due consideration to environmental issues and energy performance in the design, refurbishment, and use of our buildings. TWAM aims to enhance this commitment and make environmental sustainability intrinsic to our organisation by gaining Industry Green certification in 2012/13.

3.9 Whistle-blowing and receiving and investigating complaints from the

public

TWAM has a Confidential Reporting Policy enabling anyone who works for TWAM, (including temporary and agency staff, and those providing goods and services to TWAM) who may have serious concerns about TWAM operations, to voice those concerns with the knowledge that they will be addressed fairly


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and in confidence. The Policy is available on the website and provides advice on how to raise concerns. TWAM has a Counter Fraud and Corruption Policy approved by the Joint Committee. In addition to providing advice, information and support to officers, a Fraud Response Plan is included, clearly detailing how concerns regarding suspected instances of fraud and corruption can be reported, and how investigations into suspicions will be conducted and concluded. TWAM has a Customer Comments, Compliments and Complaints Procedure. Matters raised through this process are reviewed regularly by the SMT.

3.10 Identifying the development needs of members and senior officers in

relation to their strategic roles, supported by appropriate training

TWAM values its staff as one of its greatest assets and is committed to identifying and fulfilling the learning and development needs of officers, volunteers and members. In 2011/12, TWAM underwent a new Investors in People (IIP) Assessment which concluded that TWAM should continue to be recognised as an Investor in People and awarded Silver Status. TWAM has produced a Workforce Development Plan to ensure both staff and volunteers have the necessary skills and knowledge to be effective in carrying out their responsibilities. For new staff, there is a formal induction and training programme. During 2011/12, TWAM replaced its annual Personal Development Plan reviews with a new appraisal system designed to ensure each member of staff understands their role and how they fit into the wider organisation, make sure that staff know what they are responsible for and how they are expected to deliver this and what resources or support is needed to enable staff to carry out their work effectively. Whilst elected members are supported via their individual authority through an induction programme, training needs assessments, mentoring and their own Learning and Development Plans, TWAM also provides specific induction and ongoing development opportunities. The Audit Committee carried out an annual self-assessment of its effectiveness and agreed an action plan which includes addressing training needs.

3.11 Establishing clear channels of communication with all sections of the community and other stakeholders, ensuring accountability and encouraging open consultation

TWAM has a long history of community consultation and participation. Our work with users and other stakeholders has assisted with the design of services and informed programme development. Methods of communication with the public and stakeholders include:

• The annual Corporate Plan which sets out TWAM’s strategic objectives.


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• The Annual Report provides a record of activities and achievements in the previous year.

• Regular review meetings with the five local authorities, Newcastle University, DCMS, ACE and other stakeholders.

• Established consultation frameworks including: The Museums and Galleries Disabled Access Group: a group of disabled people serving as advisory body and critical friend to TWAM; Collective Minds: a young persons group informing programme development; gathering of customer satisfaction data through surveys, comments and mystery shopping.

• Publication of Joint Committee and Audit Committee agendas and papers on the website in advance of meetings, which are held in public unless there are specific reasons for confidentiality.

• Project specific consultation and evaluation.

Following TWAM’s participation in the Paul Hamlyn Foundation funded collaborative investigation into engagement and participation in museums and galleries in the UK, TWAM has secured £150,000 over three years to develop organisational change within museums and galleries that are committed to active partnership with their communities, with the ambition of affecting the museum sector more widely. TWAM maintains a close working relationship with key partners. Stakeholders also ensure that TWAM continues to reflect upon its priorities and its governance arrangements.

3.12 Incorporating good governance arrangements in respect of partnerships

and other group working as identified by the Audit Commission’s report on the governance of partnerships and reflecting these in TWAM’s overall governance arrangements.

TWAM is working in partnership with a wide range of other organisations and has compiled a partnership register to record all significant partnerships in which it is involved. Our partnership working is governed by a Significant Partnerships Code of Practice. This Code of Practice aims to provide advice and guidance for partnership arrangements in which TWAM is involved. Its purpose is to ensure that good practice is embedded and practiced throughout our partnership working. The most significant funding partnerships during 2011/12 were with:

• The five councils in Tyne & Wear who provided core funding;

• The DCMS who also provide core funding;

• The MLA who provide Renaissance funding;

• ACE, who assumed responsibility for museums and libraries from 1 October 2011;

• Newcastle University who core funds the Great North Museum.


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In addition key partners included:

• The National Archives;

• National Portrait Gallery;

• British Museum;

• The Tate;

• National Gallery;

• Nelson Mandela Bay Metropolitan Municipality.

4. Review of effectiveness TWAM has responsibility for conducting, at least annually, a review of the effectiveness of its governance framework including the system of internal control. The review of effectiveness is informed by the work of the senior managers within TWAM who have responsibility for the development and maintenance of the governance environment, the HoA&SR’s annual report, and also by comments made by the Audit Committee, external auditors and other review agencies and inspectorates.

The review process includes:

• The Archives & Museums Joint Committee as the primary source of scrutiny.

• Annual reviews of TWAM’s financial accounts and supporting systems by the external auditors leading to their opinion as published in the year-end statements.

• The Annual Audit letter from the external auditor, reported to the Joint Committee in November 2011.

• Views and comments from the Audit Committee, which oversees internal control arrangements and helps to secure improvements in these systems.

• The Annual Internal Audit Opinion, informed by the work of the Internal Audit Section operating under the requirements and standards of the CIPFA Code of Practice for Internal Audit in Local Government in the UK (2003) and a risk-based audit plan which is informed by the Joint Committee’s risk management strategy. The plan is approved by the Audit Committee annually. The HoA&SR has carried out an independent review of the internal control environment, which is reported to the Audit Committee. He has concluded that the state of the internal control environment is satisfactory.

• The Value for Money conclusion issued by the auditors.

• The annual assurance statements confirming the adequacy of governance arrangements within service areas completed by TWAM SMT.

• TWAM’s Strategic Risk Register, which holds the most significant risks to TWAM’s objectives.

• The review of the Joint Committee’s arrangements on Internal Audit. This review, required by the Accounts and Audit (Amendment) Regulations 2006, requires the Joint Committee to review the effectiveness of its system of Internal Audit once a year. The 2011/12 Review concluded that Internal Audit complies with all the organisational standards set out in the 'CIPFA Code of Practice: Internal Standards for Local Government in the UK'.

• The opinion of the ACE’s Accreditation Panel on TWAM’s status in respect of the Accreditation Standard.


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• VAQAS assessment.

• IIP assessment.

• Due diligence review carried out on behalf of the DCMS and ACE.

• Regular surveys of visitors by BDRC for TWAM; and visitors to British Archives carried out by the Public Services Quality Group.

A working group comprising members of the Audit Committee and TWAM officers reviewed the sources of assurance in place during 2011/12, considered the effectiveness of the current governance framework and highlighted improvement areas for 2012/13 designed to ensure that continuous improvement of the system is in place.

5. Significant governance issues

The system of governance (including the system of internal control) can only provide reasonable and not absolute assurance that assets are safeguarded, that transactions are authorised and properly recorded, that material errors or irregularities are either prevented or would be detected within a timely period and that significant risks impacting on the achievement of TWAM’s objectives have been mitigated. The 2011/12 review has not identified any items which are considered to represent a significant internal control issue and therefore require disclosure in the 2011/12 Annual Governance Statement.

6. Continual improvement in the governance and internal control environment

In order to develop and maintain an effective governance and control environment, there is a need for continuous review, reflection and improvement in an environment that is constantly changing and presenting new risks. The annual review of effectiveness in 2010/11 highlighted the following improvement areas which were the focus of the action plan during 2011/12. Progress against these specific improvement areas is summarised below.

Improvement Area Improvements Implemented Information Management

Project split into two phases/years: Digital (2011/12) and Non-digital data (2012/13). Significant progress on digital data rationalisation achieved, including identification of IT Champions and establishment of data hierarchy. Full implementation of digital element delayed until Newcastle City Council completes server enhancements.

Business Continuity The TWAM Business Continuity Management Plan was approved by the Joint Committee on 26 April 2012. During 2011/12, TWAM has joined forces with Tyne and Wear Fire and Rescue Service to further enhance the protection of the region’s most precious historical artefacts. The successful working partnership between the two organisations now includes information and equipment designed to preserve TWAM’s buildings and collections.


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Develop a performance framework for TWAM

TWAM introduced a strengthened performance framework to monitor venue performance on a monthly basis. There are a variety of different indicators being monitored, bracketed broadly under 'visitors', 'satisfaction', 'income', 'costs' and 'human resources'. The Framework’s focus is on what can be done to influence current and future performance as opposed to reviewing what has happened in the past and involves monthly meetings of relevant officers.

Information Technology

Commenced merger of the TWAM Active Directory to Newcastle City Council Active Directory to improve resilience. Appointed ICT Champions to help communicate the process of implementation of the new ICT and Information Management systems. TWAM Senior ICT Officer seconded to NCC IT to support the implementation.

Collections Management

TWAM’s new collections management software, KE- EMu went live in November 2011. The new system revolutionised how TWAM stores and manages collections information and will also improve how our diverse audiences engage with collections. The new Accreditation Standard has changed the requirement relating to backlogs (previously SPECTRUM standard by 2015) and now refers to plans to improve collections documentation and documentation systems.

Records Management

An independent review of the Records Management function was undertaken during 2011/12. The recommendation was to continue with the existing level of service and invest in a new computer system.

Workforce Development

In January TWAM underwent an IIP assessment. This led to the recommendation by the Assessor that TWAM be awarded the Silver Standard under the new, rigorous assessment framework. The Personal Development Process was reviewed and a new staff appraisal process introduced.

Efficiency New Multi-Functional Devices (printer/photocopiers) are now installed at all TWAM venues delivering savings of £1,450 per month. The TWAM Management structure was reviewed including reductions in the Senior Management team and middle managers. The migration to the Newcastle City Council paperless ordering and billings system POPS was rescheduled for 2012/13 to ensure the changes in management were effectively captured.


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During 2011/12, TWAM also implemented the following to strengthen its corporate governance environment:

• Following a review of the exhibition planning process by Internal Audit and a satisfactory report, TWAM have implemented all the recommendations to further enhance the robustness of the service provided.

• A database to record projects and a project management health-check have been introduced.

• An independent due diligence review of TWAM was commissioned by the DCMS and ACE and carried out by Deloitte LLP to ensure that the transfer of responsibility for core funding from DCMS to ACE was in the best interests of those involved and did not present unacceptable risks to ACE or TWAM.

Although significant progress was made on all areas identified for improvement during 2011/12, the need to prioritise work in relation to work-force planning and the need to implement significant budget savings whilst maintaining public services (as well as the unavailability of required data storage with NCC’s IT infrastructure) has resulted in delays in fully implementing the Action Plan by 31 March 2012. The areas affected, Information Management, and migration into the POPS system will be prioritised in 2012/13. The issues which have now been designated as Continuous Improvement will be monitored internally by SMT and an annual review of progress will be submitted to the Audit Committee. The annual review of effectiveness has highlighted the following additional improvement areas to further enhance our governance arrangements which will be the focus of the organisation’s improvement plan for 2012/13.

Improvement Area Action Responsible Officer Ethical Policy Develop an Ethical Policy to

set out framework for accepting investment/support on an ethical basis.

Head of Finance, Governance & Resources

Community Involvement

Participate in the Paul Hamlyn Foundation funded 'Our Museum' programme to work with communities and deliver year 1 of this programme including developing extended consultation and engagement.

Head of Programmes

Gain the Industry Green Standard

Work with Julie’s Bicycle to produce an environmental policy/plan which makes reference to our commitment to reducing energy and water costs and how we intend to achieve this.



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Develop internal quality assurance process to ensure effective implementation of 2012/13 budget challenges whilst maintaining service quality.

Director

Complete integration into Newcastle City Council’s paperless ordering and invoicing system POPS.


Efficiency, Value for Money & service quality

Archaeology Unit: Implement changes to status of TWM Archaeology based on business plan.

Head of Archives & Collections

Records Management

Implement the recommendations of the Records Management review.

Head of Archives & Collections

TWAM Review Undertake a comprehensive review of TWAM with the intention of negotiating a new Joint Agreement to take effect from 1 April 2013.

Director

Workforce Development

Develop a TWAM reward and recognition strategy and mentoring programme in line with IIP recommendations.

Head of Programmes

7. Conclusion The governance (and internal control) environment operating during 2011/12 is considered to provide reasonable and objective assurance that any significant risks impacting on the achievement of TWAM’s principal objectives will be identified and actions taken to avoid or mitigate their impact.

We propose over the coming year to take steps to address the above matters to further enhance our governance arrangements. We are satisfied that these steps will address the need for improvements that were identified in our review of effectiveness and will monitor their implementation and operation as part of our next annual review. ________________

__________________

_________________

Paul Woods Treasurer to the Joint Archives & Museums Committee

Iain Watson Director of Tyne & Wear Archives & Museums

Cllr. Ged Bell Chair of the Joint Archives & Museums Committee

27 September 2012 27 September 2012 27 September 2012


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Independent Auditors’ Report to the Members of the Tyne & Wear Archives & Museums Joint Committee

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Glossary of Terms Abbreviations The symbol “k” following a figure represents thousand.

The symbol “m” following a figure represents million.

Accruals Income and expenditure is recognised as they are earned or incurred, not as money is received or paid.

Accounting policies Those principles, bases, conventions, rules and practices applied by an entity that specify how the effects of transactions and other events are to be reflected in its financial statements.

ACE Arts Council England

Actuarial gains or losses (Pensions)

For a defined benefit pension scheme, the changes in actuarial deficits or surpluses that arise either because events have not coincided with the actuarial assumptions made for the last valuation (experience gains or losses), or the actuarial assumptions themselves have changed.

AGS Annual Governance Statement.

Assets Items of worth which are measurable in terms of money as at 31 March.

Balances The total level of surplus funds the Joint Committee has accumulated over the years as at 31 March.

Budgets A statement of the Joint Committee’s forecast expenditure, that is, net revenue expenditure for the year.

Capital Adjustment Account

An account that reflects the difference between the cost of fixed assets consumed and the capital financing set aside to pay for them.

Capital Expenditure

Expenditure on the acquisition of a fixed asset or expenditure which adds to and not merely maintains the value of an existing fixed asset.

Cash and Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

CIPFA Code of Practice (The Code)

The Code sets out the accounting concepts and accounting principles which underpin the Statement of Accounts.


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Comprehensive Income & Expenditure Account

This account summarises the resources that have been generated and consumed in providing services and managing the Joint Committee during the financial year.

Consistency

The principle that the accounting treatment of like items within an accounting period and from one period to the next is the same.

Core Activity

Income and expenditure incurred in the day to day running of the archives, museums and galleries, including exhibitions, learning, collections care, building costs and the corporate centre. It is primarily funded by the five districts, the DCMS and Newcastle University.

Creditors

An amount owed by the Joint Committee for work done, goods received or services rendered, but for which payment has not been made as at 31 March.

Current Service Cost (Pensions)

The increase in the present value of a defined benefit scheme’s liabilities expected to arise from employee service in the current period.

Debtors

Monies owed to the Joint Committee but not received at the balance sheet date.

Defined Benefit Scheme (Pensions)

A pension or other retirement scheme other than a defined contribution scheme. Usually, the scheme rules define the benefits independently of the contributions payable, and the benefits are not directly related to the investments of the scheme. The scheme may be funded or unfunded.

DCMS Department for Culture, Media & Sport

Earmarked Reserve

A sum set aside for a specific purpose.

Emoluments

Payments received in cash and benefits for employment.

Events after the Balance Sheet Date

Events after the balance sheet date are those events, favourable and unfavourable, that occur between the balance sheet date and the date when the Statement of Accounts is authorised for issue.

Expected Rate of Return on Pensions Assets

This is an actuarially calculated estimate of the return on the scheme’s investment assets during the year.

Fair Value

The fair value of an asset is the price at which it could be exchanged in an arm’s length transaction (a transaction between two related or affiliated parties that is conducted as if they were unrelated, so that there is no question of a conflict of interest) less, where applicable, any grants receivable


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towards the purchase or use of the assets. Fees and Charges Income arising from the provision of services, for example,

charges for research enquiries or group tours.

Financial Instrument Document (such as a cheque, draft, bond, share, bill of exchange, futures or options contract) that has a monetary value or evidences a legally enforceable (binding) agreement between two or more parties regarding a right to payment of money.

FRS

Financial Reporting Standard issued by the Accounting Standards Board.

Going Concern

The concept that the Joint Committee will remain in operational existence for the foreseeable future, in particular that the revenue accounts and balance sheet assume no intention to curtail significantly the scale of operations.

Heritage Assets Assets held and managed by the Joint Committee principally for their contribution to knowledge or culture.

IFRS International Financial Reporting Standard issued by the International Accounting Standards Board.

Impairment

The loss of value in a fixed asset arising from physical damage, deterioration in the quality of service provided by the asset or from a general fall in prices.

Liabilities

Any amounts owed to individuals or organisations, as at 31 March, which will have to be paid at some time in the future.

Liquid Resources Current asset investments that are readily disposable by the Joint Committee without disrupting its business and are either readily convertible to known amounts of cash at or close to the carrying amount or traded in an active market.

Materiality

An item is material if its omission, non-disclosure or mis-statement in the financial statements could be expected to lead to a distortion of the view given by the financial statements.

Movement in Reserves Statement

Shows the movement of reserves held by the Joint Committee analysed into Usable and Unusable reserves.

MLA Museums, Libraries & Archives Council

Provisions

These are sums set aside to meet liabilities or losses which have been incurred but where the amount and/ or timing of such costs are uncertain.


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Prudence

This accounting concept requires that revenue is not anticipated until realisation can be assessed with reasonable certainty. Provision is made for all known liabilities whether the amount is certain or can only be estimated in the light of information available.

Related Party Transactions

A related party transaction is the transfer of assets or liabilities or the performance of services by, to or for a related party irrespective of whether a charge is made. An example could be the purchase, sale, lease, rental or hire of assets between related parties. A related party indicates two parties who are joined by a special relationship prior to the transaction or deal.

Reserves

These represent specific amounts set aside for future policy purposes or to cover contingencies.

Revenue Expenditure

Expenditure on providing day-to-day services, for example employees’ costs and premises costs.

SeRCOP Service Reporting Code of Practice

Strain on the Fund Pension strain is a concept for the management of the pension fund finances arising from an employee retiring early, without actuarial reduction of pension. This causes lost contribution income and creates an interest cost arising from the associated earlier, increased cash flow.

Usable Reserves A reserve that can be applied to fund expenditure, e.g. Earmarked Reserves

Useful Life

This is the period over which the Joint Committee derives benefit from the use of a fixed asset.

Unusable Reserves A reserve that cannot be applied to fund expenditure, e.g. Accumulating Absences Account.

Use of Brackets Brackets are used to indicate income, decreases in assets or increases in liabilities or increases in the reserves.

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